Steel mills reject BHP's premium demand
(Shenzhen Daily/Agencies)
Updated: 2005-04-05 14:18

China's steel mills have rejected demands by top global miner BHP Billiton Ltd./Plc to pay premiums on iron ore purchases on top of a 71.5 percent price increase for 2005 term cargoes.

The China Iron and Steel Association said Monday BHP wanted an extra US$7.50 to US$10 a ton on freight fees in addition to the same 71.5 percent rise in ore prices agreed earlier with miners Companhia Vale do Rio Doce and Rio Tinto.

China is the world’s biggest steel producer and consumer, making about 300 million tons of crude steel annually. BHP had yet to wrap up negotiations on 2005 iron ore prices with the country’s steelmakers, a BHP official said.

An executive with top steelmaker Baoshan Iron and Steel Co. Ltd. said major Chinese mills, including the parents of Angang New Steel Co. Ltd. and Wuhan Iron and Steel Co. Ltd., had spurned BHP’s request.

“China’s 16 major companies reached a consensus that BHP Billiton’s demand is unreasonable and goes against international practice,” the association said.

Li Xinchuang, vice president of the China Metallurgical Industry Planning & Research Institute, said Chinese mills and BHP were still negotiating.

BHP said Monday it had yet to settle protracted iron ore price talks with steel mills, which reportedly irked the Chinese.

“We are still in negotiations,” BHP spokeswoman Emma Meade said, referring to discussions with steel mills for shipments that started April 1 and are scheduled to run until March 31, 2006.

Close