TPT July 2010

G lobal M arketplace

reported that enquiries there for spot iron ore imports had dried up as steel prices fell on concerns about oversupply and unexpectedly soft demand. The Chinese steel mills became reluctant to resume spot iron ore imports without further price declines. AMM was told by an iron ore trader in Lianyungang, in China’s northeastern Jiangsu Province, “Steel mills couldn’t easily pass on the high costs of iron ore to end-users during the May-June period, which is the traditional prime consumption season. They have become wary about spot imports.” Elsewhere in metals . . . › Kobe Steel, Ltd, of Japan, will establish a company in China to produce andmarket aluminium forgings for automotive suspensions. Plans called for a June start on a plant in Suzhou New District, Jiangsu Province, with production to commence in August 2012. The new company, Kobe Aluminum Automotive Products (China) Co Ltd, will install a 6,300-metric-ton mechanical forging press and heat treatment equipment. Total investment is estimated at $27mn. Aluminium forgings for automotive suspensions are increasingly used in luxury cars to reduce weight and meet environmental regulations. As noted by the materials magazine AzoM , (14 April), Kobe Steel has a large share of its home market for the forgings, produced at the company’s Daian Plant in Inabe, Mie Prefecture, Japan. Kobe Steel’s US subsidiary in Bowling Green, Kentucky, supplies aluminium forgings for suspensions to auto makers in North America. › According to data released in April by the International Copper Study Group (ICSG), the market for refined copper could show

“We [steel makers] have no alternative but to transfer the increase in costs to the market,” said Mr Rocca, adding that the quarterly ore pricing would render the steel industry less competitive than the aluminium and raw materials industries. An estimate by Credit Suisse Group cited by Bloomberg gives Vale, Australia’s BHP Billiton Ltd, and the British-Australian Rio Tinto Group about two-thirds of the globally traded iron ore market, worth $200bn a year. Billiton and Rio Tinto, the second- and third-largest exporters of the ore, are considering a 50-50 joint venture to meld their operations in Australia. The combination, presented as a means of saving at least $10bn a year in costs, is under review by competition authorities in Europe, Australia, South Korea and China. In Mr Rocca’s view, the resulting “excess concentration” would “severely hamper our steel industry.” › The debate over annual vs quarterly pricing pitted mining companies seeking to cash in on higher spot-market prices against steel mill customers demanding guaranteed prices for 12 months. The quarterly system now in place calls for the price in a given quarter to be based on the indexed, or averaged, spot price paid in the previous quarter. When Mr Rocca spoke, steel makers were still in talks on pricing for iron ore purchases in the April-June period, and discussion of the quarter beginning in July had not yet begun. Even so there were reports that BHP was getting more than $130 a metric ton for its ore under April-June contracts – more than twice last year’s fixed price. › A 13 May item in American Metal Market illustrated the dependence of any iron ore pricing scheme on local conditions. Traders in China

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