China Assoc Asks Cos To Boycott Rio's Spot Ore Sales

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

17 May 2008

China Iron & Steel Association Thursday asked domestic steel mills and iron ore traders to boycott Rio Tinto PLC's (RTP) spot iron ore sales, as the company isn't fully meeting its long-term contract supply obligations with Chinese firms. "We appeal to domestic mills and traders not to support or participate in Rio Tinto's spot iron ore sales activities in China," the association said on its Web site. Even as the company informed Chinese mills that it didn't have enough ore to fulfill contracts, it was offering additional ore on the spot market, leading people suspect it is taking advantage of higher spot prices, said the association, which is comprised of major domestic mills.
Rio Tinto supplied 52.37 million metric tons of iron ore to Chinese mills in 2007, or only 86.24% of the 60.73 million tons specified in term contracts. In 2006, it supplied 48.46 million tons against a contracted amount of 54.81 million tons, according to the association.
Rio Tinto wasn't immediately available for comment.
Chinese steel mills, led by Baosteel Group Corp., are still negotiating with Rio Tinto and BHP Billiton Ltd. (BHP) on the iron ore contract price for 2008.
In late February, the parent of Shanghai-listed Baoshan Iron and Steel Co reached an agreement with Brazilian miner Companhia Vale Do Rio Doce, or Vale, for a 65% or 71% increase of contract prices, depending on ore quality.

Source: CNN