| The TEX Report Topics < Iron Ore > | |
| HOME >> Topics List >> August, 2009 >> 18 (Tue) |
| Baosteel, CISA Fix Iron Ore Prices With FMG |
| = With approx 35% price reduction for second half year = |
|
Australian Fortescue Metals roup (FMG) announced August 17 it has achieved a landmark agreement with China's Baosteel Group Corporation and China Iron and Steel Association (CISA) for an agreed China price for all FMG iron ore sold to Chinese mills for the period July 1 to December 31, 2009. The agreed price is US$0.94/dmtu for FMG's Rocket Fines on an FOB basis; it is around 3% below the benchmark price agreed by Rio Tinto with non-Chinese steel mills in East Asia; and it represents an approximately 35% price reduction from the 2008 benchmark prices. Baosteel Group and CISA also settled a price of US$1.00/dmtu, FOB, for high grade lump ore, which is slightly lower than the benchmark price: US$1.12/dmtu, FOB. Prices per tonne, FOB, of Rocket Fines and lump ore become approximately US$55.50 and US$61.00, respectively. The agreement, signed by Baosteel Group and CISA, commits Chinese steel mills to acquire approximately 20 million wet metric tonnes from FMG for the period between July 1 and December 31 2009. A condition subsequent to this agreement is the completion of finance by Sep. 30, 2009, by Chinese financiers on terms acceptable to FMG. This is estimated by FMG to be an amount ranging between US$5.5 billion and US$6.0 billion. Under the agreement, CISA has guaranteed that a priority will be given to FMG to negotiate iron ore prices for 2010, if the annual pricing negotiation is conducted. Andrew Forrest FMG Chief Executive Officer said the agreement breaks the market impasse which has enveloped the Chinese iron ore industry in uncertainty and added risk for the past 12 months. |
| last modified : Fri 21 Aug, 2009 [10:02] |
