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| Iron ore price negotiations - Ms Xie slams unified iron ore proposal - 09 Mar, 2010 | ||
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Dow Jones reported that the former chairwoman of Baosteel Group Corp sharply criticized a proposal by rival Hebei Iron and Steel Group to centralize Chinese iron ore imports under a unified company. Ms Xie Qihua who helmed Baosteel from 1998 to 2007 said "If they succeed, it will cause a monopoly in domestic iron ore supply. Such a company would not be in line with international market regulations. Her comments were the first public criticism in the country of a proposal said to be unpopular among steel mills, and it comes from a figure still regarded as an influential force in the industry.” Ms Xie currently chairwoman of the metallurgy chapter of the China Council for the Promotion of International Trade was speaking to Dow Jones Newswires on the sidelines of the annual session of the Chinese People Political Consultative Conference, an advisory body to China's parliament which kicks off its annual meeting Friday. She said the proposal to unify imports under one company would also strain an already tumultuous relationship between China and global iron ore miners. If the company is formed, it will be very hard to establish long term relations with global iron ore miners. She said "Of course Chinese steel mills have to be wary of miners getting involved. We shouldn't let them get involved in setting up the center." She added that "Rather it should look for signs that industrial processes are up to environmental standards among steel mills." A senior executive with Hebei Iron, which last year overtook Baosteel as the country largest steelmaker by output, floated the proposal to centralize ore imports at a closed-door industry meeting Friday last week. The executive said a company could be formed using initial investments from China largest steel mills, which would control imports and distribute iron ore to investors based on how much they invest. It could also handle annual price negotiations with miners. Hebei Iron is hewing closely to a directive set out by the government-backed China Iron and Steel Association, which has long sought to set a unified price for iron ore imports, believing it would eliminate the disadvantage a large and fragmented local steel industry faces in talks with just a few major global miners. But Ms Xie backed the industry view the major suppliers shouldn't be allowed to get involved in an iron ore distribution center whose berths are being built at Qingdao harbor. Industry officials fear that the center would become a base for a vibrant iron ore spot market, which would help to create fluctuating, market driven prices that would undermine a unified import price. In a sign that the steel industry has its own views that don't always reflect the state's objectives, Ms Xie also took aim at a high level government push to slash steelmaking capacity in China. She said the government shouldn't simply focus on signs of overcapacity in the steel sector, and should instead favor mills that invest in environmentally friendly operational methods. (Sourced from Dow Jones) | ||
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