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PrintAn official with China Iron and Steel Association (CISA) said late Monday China might require Rio Tinto Group and its rivals to cut iron ore prices to meet 1994 levels steel prices had plunged to.
"Iron ore prices should be consistent with steel prices which have fallen to the 1994 level. We will require Rio Tinto and other suppliers to cut prices sharply," said Shan Shanghua, secretary in general of CISA.
An earlier forecast by Australia and New Zealand Banking Group Ltd. said China might demand a 50-percent price cut by producers Cia. Vale do Rio Doce, Rio Tinto and BHP Billiton Ltd..
This year benchmark contract iron ore fines sold by Rio Tinto cost around 92.58 U.S. dollars per metric tonne, while in 1994 it was sold at around 16.685 U.S. dollars a tonne. Making iron ore prices consistent with current steel prices in China would mean an 82 percent decline.
The official said Chinese steel makers were all unprofitable in Oct. because exports and demand from carmakers and builders shrank.
If there is a cut in the iron ore price in 2009, it would be the first in seven years. Merrill Lynch & Co. said on Friday that prices may drop 20 percent next year and BHP may have to cut output by 25 percent.
Vale, Rio and BHP account for three quarter of sea borne traded iron ore, Rio and BHP ship materials from Australia and Vale, the largest supplier, from Brazil. –Xinhua
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