Iron ore price negotiations between China's steel makers and western suppliers have nearly concluded with both sides agreeing to a 10% increase in prices this year, an official with Mysteel.com, a popular local information provider to China's steel industry, said Monday.
"We have information from a person who participated in the talks," said Yu Liangui, head of information department at Mysteel.com, said, when contacted.
Over the weekend, the website informed its members that talks had concluded with agreement on a rise in prices, he said.
"Iron ore price talks are over. The two parties agree to a 10% price rise this year," read Mysteel's message to its members, a copy of which was made available to Dow Jones Newswires.
The limited circulation message was sent to top officials of major steel mills, steel producers and some investment institutions, Yu said.
"The talk is almost (completed) and (the decision) is very unlikely to change. We're pretty sure this time, so we sent the news to our members," Yu said.
A top official with a major Chinese steel producer Monday confirmed he had received the message from Mysteel.com.
According to industry insiders, officials from major Chinese steel mills were briefed by Shanghai Baosteel Group Corp. Friday on the progress on negotiations.
China's Shanghai Baosteel Group Corp., representing the country's steel makers, held several rounds of talks since late last year with suppliers such as Australia's BHP Billiton Ltd., Rio Tinto Group and Brazil's Companhia Vale do Rio Doce, or CVRD, to set 2006 iron ore prices.
The three suppliers account for a combined 70% of global iron ore export sales. Baosteel or the suppliers are yet to make an announcement on the conclusion of talks.
The first three rounds of talks ended without a decision as Baosteel, supported by the Chinese government, insisted on a price cut while suppliers demanded an increase in prices.
The three mining companies were reported to be seeking a 20% increase in prices to be offered to Chinese steel makers from last year's $41-$42 a metric ton, free on board.
New prices being negotiated are for the marketing year that began April 1.
Last year, Chinese steel makers agreed to a sharp 71.5% on-year rise in iron ore prices, given China's huge overall steel production capacity.
Most industry participants had expected a further increase in prices this year, given China's voracious appetite for iron ore.
According to latest estimates from Chinese Customs, iron ore imports totaled 24.89 million tons in February, up 37.06% on year.
In the January-February period, iron ore imports totaled 51.47 million tons, up 31.9%.
An official with a steel mill under China Minmetals Corp. had earlier said Chinese steel producers are able to tolerate a 5%-10% price increase, based on their financial conditions.