June 20, Xinhua News — (Reporter Li Rong) According to official sources, Baosteel Group has reached a pricing agreement with BHP Billiton, one of the world's leading iron ore producers, on behalf of Chinese steel mills. The new price for both fine and lump ore marks a 19% increase compared to the previous year. This adjustment aligns with the "starting price increase" that most global steelmakers have accepted. Baosteel has also finalized similar agreements with two other major iron ore suppliers: Rio Tinto’s Hammersley in Australia and Vale from Brazil. Price details will be announced separately on June 21 and 22. With global iron ore contract prices typically released by mining companies, Chinese steel mills have opted not to issue their own statements simultaneously. The China Iron and Steel Association is expected to soon conduct an overall evaluation of this year’s global iron ore price negotiations on behalf of domestic steel producers. The much-anticipated “China price” did not materialize. On May 16, Vale and ThyssenKrupp announced a 19% initial price hike, which Chinese steel mills found unacceptable. They argued that the pricing failed to adequately reflect conditions in the Chinese market and called for further discussions with the three major mining companies. Negotiators are now focusing on key issues specific to the Chinese market. Industry insiders noted that while the call for continued negotiations hasn’t yielded immediate results, it has clearly sent three important messages: First, global iron ore price talks must seriously consider the “China factor.” Second, the current negotiation mechanism has significant flaws and needs improvement. Third, long-term cooperation between suppliers and buyers should be strengthened. These signals indicate how Chinese steel mills plan to approach future negotiations. The 2006 global iron ore negotiations are expected to last longer than usual, with China remaining at the center of the discussion. Analysts suggest that Chinese steel mills now have greater influence in these talks compared to last year. However, this increased voice has not yet translated into real pricing power. The main challenge remains the imbalance of market forces, which still favors the suppliers. For more updates: Iron Ore Price Tracking – Rising! Rising! Rising!

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