Since China steel industry began to participate in iron ore price negotiations, the negotiations have never been evaluated as successful in China. The results of the negotiations are announced every year, which raises questions.
"It turns out that China iron and steel enterprises have spies and provide information to competitors." Yesterday, an insider of Shandong Zhangdian Iron and Steel Plant expressed his feelings to CBN reporters.
This is not the only way for Rio Tinto to break the foundation of China's participation in iron ore negotiations. People familiar with Rio Tinto's operation path in China told CBN that apart from stealing China's state secrets through China Steel Works, Rio Tinto has many "eyes and ears" in China.
"Eyes and ears" are everywhere.
A director of the three major domestic mining enterprises once had dinner with CBN reporter * *, revealing that they often sent some employees to steel mills all over the country to investigate and understand the production needs of steel mills.
"Rio Tinto and other three major mining companies can say that they understand the needs of China steel mills through various channels." A steel industry analyst told CBN reporter.
Since 2003, the negotiation basis for Rio Tinto's spin-off of China iron and steel enterprises has been gradually established. This year Baosteel Group began to participate in iron ore price negotiations, and the China factor began to delight Rio Tinto and other three major mining enterprises. They know that China is a huge potential market.
However, the unfortunate news is that China, as a huge global buyer of iron ore, has always been regarded as having no right to speak. From 2004 to 2007, the long-term cooperative price of iron ore increased by 18.6%, 710.5%, 19% and 9.5% respectively. In the same period, the steel output of China also increased by 24.5 1%, 30.94%, 23.84% and 65.438+05. 17% respectively. Since 2008, the iron ore negotiation rules have been destroyed by "Two Extensions", and "Two Extensions" extorted a higher increase from steel enterprises through "negotiation" than Vale.
198 1 in the 28 years since the formation of the iron ore negotiation mechanism, the time before 2002 was relatively calm, and the negotiation price did not fluctuate greatly every year. Since China joined the rules of the game, Rio Tinto and the other three major mining companies have been thinking about how to get higher prices from the huge market of China.
According to the iron ore negotiation rules, the negotiation pattern is three to three, that is, the suppliers-BHP Billiton of Australia, Rio Tinto and Vale of Brazil, and the demanders-Baosteel Group, Nippon Steel and European steel mills decide the iron ore price (FOB price) in the next fiscal year. As long as any one of the mines reaches an iron ore sales contract with the steel mill, the negotiations will be terminated, and all other negotiations will accept this result.
Because the iron and steel enterprises in China are too scattered, Baosteel Group participates in the negotiations every year, and some iron and steel enterprises have private contact with Rio Tinto and other three major mining companies.
In 2003, China surpassed Japan and became the largest importer of iron ore in the world. The change of demand pattern for iron ore in the global steel industry has affected Rio Tinto's strategy. Due to the scattered enterprises in China, Rio Tinto has found a breakthrough to disintegrate this seemingly huge camp in China.
According to CBN reporter, Rio Tinto not only paid bribes to the insiders of China iron and steel production units and sent them to steel mills all over the country for investigation, but also "hired" government public relations personnel, China iron and steel experts, China mining experts and other "talents" from major steel mills and government departments all over the country with high salaries.
The reporter learned that some people who used to work in Minmetals Group, Laigang Group and other companies are currently working in the three major mining companies. These people are very familiar with China iron and steel enterprises, as well as relevant iron and steel enterprises and government departments.
Supply disruption and public opinion added fuel to the fire.
It is obviously not enough to have a group of "eyes and ears" who are very familiar with China iron and steel enterprises. Rio Tinto also needs other means to "add fuel to the fire".
Dan Shang Hua, Secretary General of China Iron and Steel Industry Association, said at the regular press conference of the association that iron ore negotiation is a very complicated matter, and the negotiation is not only about supply and demand.
An analyst who has been paying close attention to the negotiations between Rio Tinto and iron ore for a long time told CBN reporter that Rio Tinto, with the help of public pressure, created a tense atmosphere in China steel market by cutting off supply.
Since 2006, journalists have often seen news in foreign media that Australian mines have been hit by floods, ports have been affected and mines have been forced to reduce production. For example, on February 17, 2009, Rio Tinto said that heavy rains and floods are having a serious impact on iron ore operations in Pilbara, Western Australia, forcing iron ore to close, iron ore trains to stop and dock operations to stop.
This has added some tension to the iron ore market, which was originally in a balance between supply and demand. "By creating a tense atmosphere, spot prices can be boosted, and spot price increases are an excuse for long-term price increases." The above analyst said.
There are much more similar public opinion atmosphere, and Rio Tinto has created a more tense atmosphere-supply suspension. In June this year, news from China iron and steel enterprises said that Rio Tinto stopped supplying from stock. At this time, the spot price is obviously lower than the long-term cooperation price implemented according to this year's "starting price".
The same thing happened to Vale. On May 6, 2006, Vale reached an "initial price" of 19% with ThyssenKrupp, a German steel plant. A week later, Vale asked steel mills in China to accept the "initial price" before May 3 1, otherwise the iron ore originally sold to China would be resold to other countries. This finally forced China to accept the "starting price".
Since last year, BHP Billiton has put forward the iron ore index pricing, which is the spot price in disguise, because "strange goods can live". Although Rio Tinto did not take the initiative, it acquiesced to BHP Billiton's request. On June 30th this year, Steven Randall, President of Steel Index, promoted its iron ore index TSL in Beijing. Sitting opposite him is a group of representatives from China iron and steel company, iron ore trading company, mining company and futures company.
The implementation of index pricing is what mining companies such as Rio Tinto want to see. "The three major mining companies control more than 70% of the global maritime trade volume, and it is very easy to manipulate the BDI index." A broker who has been engaged in the trading of maritime index and iron ore index for a long time told CBN reporter.
In the case of sluggish demand, in order to expand sales, from the end of last year, Rio Tinto and other three major mining companies began to look for more sales targets in China. According to domestic media reports, at the end of last year, Hu Shitai reached an agreement with small and medium-sized steel mills in Jiangxi, Hebei and Shanxi on behalf of Rio Tinto. These steel mills are not qualified to import Xie Chang ore.
A conclusive evidence is that Sam Welsh, CEO of Rio Tinto Iron Ore, also publicly revealed that the spot sales of Rio Tinto's global iron ore sales have jumped to 50% of the total this year. And BHP Billiton CEO Gao Ruisi also publicly stated that BHP Billiton's iron ore sold in the spot market last quarter accounted for more than 20% of the total.
"Among these factors, the core should be to obtain information through China iron and steel enterprises and get the brand of China iron and steel industry. How can we negotiate with others?" Insiders of Shandong Zhangdian Iron and Steel Plant said.