China firm on uniform iron ore cost

Chinese steel mills want to go back to a single benchmark price as was the case in previous years, China Iron & Steel Association secretary-general Shan Shanghua said.

After Brazil's Vale won rate increases last year from the Chinese ranging from 65-71 per cent, Rio Tinto and BHP Billiton sought and eventually won average price hikes of 85 per cent.

The steel association may also revisit an earlier attempt to prod its members to stick to a uniform pricing policy while selling iron ore imported under long-term contracts in the spot market, Mr Shan said.

When spot iron ore prices soared well above benchmark rates early last year, Chinese mills sold their extra long-term contract iron ore in the spot market.

The $US19.5 billion ($30 billion) deal between Chinalco and Rio Tinto announced last week strengthened China's hand in breaking a "duopoly" in Australian iron ore mining, Mr Shan said.

Attempting to head off Australian regulatory and political opposition, Chinalco and Rio officials have been keen to downplay any sense of advantage their deal confers Chinese negotiators in the annual iron ore price talks.

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