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China tells Vale to ditch iron increase
Last Updated(Beijing Time):2008-09-17 15:29

In its first official response to Vale's request for higher iron ore prices, China's steel industry group said the mining giant should immediately stop such unreasonable behavior that would hurt long-term interests between the two sides.

Vale's halfway request for a price increase upon already-set annual contracts violated contract terms and the international rules on iron ore price negotiation, the Beijing-based China Iron and Steel Association said in a statement dated September 12 and posted on an industry Website yesterday.

The Brazilian miner has sought to raise the prices for ore sold to Asian steel mills to bring it in line with what it agreed with European customers. Market watchers said the Vale move may have been taken to position itself for the new round of price talks for iron ore which will start in November.

Asian mills pay 11-11.5 percent less than European clients, Vale said last week while confirming it was in talks with its Asian customers about higher prices. It has said there was no guarantee the talks would be successful.

"This has hurt the stable iron ore trade order between China and Brazil and their developing relationship," the CISA statement said.

Vale traditionally granted discounts to Asian customers to make up for higher shipping costs.?

Rio de Janeiro-based Vale has also asked for more this time to match the higher prices won by Australian miners Rio Tinto and BHP Billiton, who demanded freight premium to reflect their proximity to Asia. Australia won a price increase of as much as 97 percent this year, against up to 71 percent for Vale which set its prices earlier.

Source:Shanghai Daily 
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