Iron ore returning to annual pricing negotiations? The answer may be no. According to media reports, South Korea's Pohang Steel CEO Zheng Junyang said recently that fluctuating mineral prices and the global economic downturn are prompting steel producers and mines to return to 40 years of annual contract negotiations. Recently, a number of domestic steel mill leaders also expressed this willingness in an interview with the media. However, the above wishes have not been recognized by the miners. According to an interview with the reporter of "Daily Economic News", this will only represent the voice of some steel companies. Due to the existence of various pricing models in the market, steel enterprises have more flexible choices according to their own situation. In response to the renewed voice of the annual pricing model, José Carlos Martins, Head of Iron Ore and Strategy at Vale, said recently that the iron ore market is still in turmoil and that the ore pricing system is unlikely to change soon, “as long as the price of iron ore is volatile Still existing, it is difficult to implement a longer-term pricing system." On the 28th, the reporter of "Daily Economic News" contacted Vale on this issue, but as of press time, the official reply of the other party has not yet been obtained. Seniors close to Vale told the Daily Economic News that the steel industry is a capital-intensive industry, and steel companies are more focused on the stability and sustainability of production. “Since the annual pricing mechanism of iron ore has been broken, there are quarterly pricing, monthly pricing and more flexible spot pricing. Some customers like long-term cooperation, while Others are keen on spot. According to their actual situation, these can coexist. He said that due to the relatively flexible market, disputes and competition between various pricing models are also normal. Alan Davies, president of another international business of Rio Tinto, also responded. “I don’t think I’ll go back to the past,†he said. “If iron ore returns to a long-term pricing mechanism, I personally would be surprised because our customers want a shorter-term pricing mechanism, and that’s what we’ve achieved.†It is understood that South Korea and China are different, they are not only stable in production, but the mechanism for ordering steel prices downstream is different from China. According to Zhang Lin, an analyst at Lange Steel Research Center, at present, the focus of domestic steel enterprises to control costs is no longer that the pursuit of ore is bought in the short term of the year or quarter. “The sources of mines in the blast furnaces of steel mills, especially large steel mills, are mixed in many regions. Mines in countries like Iran, Indonesia, and South Africa are starting to eat. They are trying to reduce costs and achieve the ultimate in cost reduction. "she says. As for what kind of pricing model affects steel enterprises, Zhang Lin even said that for the buyer, returning to the annual pricing can not be said to be 100% disadvantage, but the probability of losing is large. "Because the current steel market demand can not get up, the production capacity is obviously over-capacity, and no one is willing to take the initiative to cut production for other people to make a wedding dress. Therefore, the result of this round of games is that some enterprises are eliminated by the market," she said.
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