It is reported that China Iron & Steel Association (CISA) Tuesday denied media reports that it had decided to suspend price negotiations with Australian iron ore giants Rio Tinto and BHP Billiton. It said speculative behaviour in the spot market had led to high price rises, forcing it to suspend the negotiations with Australia’s Rio Tinto and BHP Billiton.

Media reports said Monday that CISA decided to temporarily suspend the on-going iron ore price talks to evade unreasonable interruptions from the spot market where iron ore prices have been distorted.

But CISA refuted the above reports, saying that it never released such a statement and that its talks with Rio Tinto and BHP Billiton are underway.

Xu Zhongbo, a professor of the University of Science & Technology Beijing, noted that the iron ore price talks going on between CISA and Australian iron ore suppliers have entered into the most challenging period. It’s unlikely, said Xu, that any agreement can be produced in the short term.

Steel spot prices both on the domestic and international markets are currently surging, driving up steel production and subsequently iron ore demand.

However, Chinese steel plants may begin cutting output from the fourth quarter due to possibly arisen faltered steel demand, which may favor China in the iron ore price negotiations, Xu added.

It is reported from Shanghai Securities News friday that China is still in talks with the world’s major iron ore firms for the annual supply deal. Shanghai Securities News cites Shan Shanghua, secretary-general of the China Iron & Steel Association (CISA).

CISA demands all steelmakers around the country accept one unified iron ore import price once the price for 2009 is determined, said Shan during an expanded conference of the CISA standing council.

The measure aims at regulating excess iron ore import of small steelmakers and intermediary traders, which had hampered the negotiation by creating unnecessary demand, said Shan.

In the first half of this year, iron ore import soared by 29.29 percent year on year to 297 million tonnes, while intermediaries imported 131 million tonnes, up 90.43 percent from last year.

However, Shan did not reveal when the negotiation would reach an agreement.

China has been working to seek a cut of more than 40 percent in iron ore price from the world’s three biggest mining companies — Vale of Brazil, Rio Tinto and BHP Billiton, said the CISA earlier.

The association said in a statement in late May that China’s steel companies would refuse to accept the 33-percent price cut reached between Rio Tinto and Japan’s Nippon Steel Corp.

Such price cuts would lead to overall losses for Chinese steel companies, said CISA.

If the CISA failed to reach a supply agreement with any of the three biggest mining companies — Vale of Brazil, Rio Tinto and BHP Billiton — Chinese steel makers would have to turn to the spot market for supplies.

According to the statistics released by the CISA Thursday, 71 large and medium steel manufacturers gained 1.73 billion yuan (253.29 million U.S. dollars) in the first two quarters.

It is reported from the China Iron and Steel Association last friday that China’s major steel makers gained net profits of 6.3 billion yuan in June, which helped reverse the trend of losses for the first half of this year.

During the first half of 2009, net profits of these steel makers totaled 1.73 billion yuan.

The association said in a report that China’s steel industry is still in recession. Among the 71 mid- and large-sized steel enterprises, 25 suffered losses during the year’s first half.

It is predicted that crude steel output will hit 660 million tons for the full year of 2009, while consumption is expected to reach 453 million tons.

This compared with a combined profit of 1.04 billion yuan in the 71 large and medium-sized steel mills in May. Their aggregate profit totalled 1.73 billion yuan in the first half this year, said the latest statistics released by the China Iron and Steel Association this week.

Eight of the 71 companies were still losing money last month, compared with 20 in May.

Steel prices rose “at a stunning rate”, said Xu Xiangchun, analyst of Shanghai Ganglian E-commerce Co., Ltd., an IT service company specializing in collecting steel information.

The price increase of major steel producers was the main reason for climbing market prices as there were no statistics indicating a surge in demand or supply shortage, Xu said.

Some 46 steel companies had raised prices this month as of Wednesday, according to statistics of the Umetal.com, an industry service provider.

The price of cold rolled coil in the Beijing market has soared by 500 yuan per tonne since July, and hot rolled coil by 340 yuan, according to the statistics from the IT service company.

The per-tonne prices of medium plates and screw steel also saw an increase of 250 yuan and 600 yuan respectively.

Share prices of Baosteel, the country’s largest steel maker, gained 3.43 percent to 9.35 yuan as of 2:05 p.m. Thursday. Angang Steel Company Ltd. surged 4.37 percent to 17.2 yuan.

It is reported that the European Union decided on Monday to impose definitive anti-dumping duties on imports of Chinese steel wire rods for five years, further straining bilateral trade relations.

A meeting of foreign ministers of the 27-nation bloc approved without discussion the measure of imposing a definitive anti- dumping duty up to 24 percent on China’s imported steel wire rods. The definitive measure came after temporary duties were slapped in February following European producers claimed that Chinese producers had sold their products in low prices and hurt their businesses.

The imposing of definitive anti-dumping duties needs the approval of all 27 member states.

The European Commission, the EU’s executive body, launched last year an anti-dumping probe against steel wire rods from China, Moldova and Turkey following a complaint lodged in March, 2008 by the European Confederation of Iron and Steel Industries (Eurofer), a Brussels-based industry body representing major EU steel producers such as ArcelorMittal and ThyssenKrupp.

The EU anti-dumping investigation normally takes no more than a year, and in any case must be completed within 15 months, after which the EU governments will have the final say on whether to impose definite five-year anti-dumping duties.

However, the commission may impose provisional duties within 60 days to nine months during the investigation period, which may last for six to nine months.

After that, the commission decides whether to impose definitive anti-dumping duties.

Since last year, the EU lodged a series of anti-dumping probes against steel and iron product imported from China out of baseless claims, straining bilateral trade relations.

Actually, European steel users are also opposed to any imposing of anti- dumping measures, fearing that they would face supply shortage if the EU takes anti-dumping measures against Chinese steel products.

China’s Ministry of Commerce has voiced regret over the anti- dumping applications and hoped to solve the issue through dialogue and negotiations. It also hoped the commission would refrain from adopting anti-dumping measures.

It is reported by the state government that Anshan Iron & Steel Group, which controls China’s second-largest listed steelmaker, will study building steel plants and iron ore processors in Western Australia.

As we all know that Western Australia is about four times the size of France, produces one-third of the world’s traded iron ore; while China is the world’s biggest consumer of the steelmaking material.

The Chinese company signed a memorandum valid until December 2010 to conduct a study into building “steel plants and rolling mills,” according to a statement from Western Australian Premier Colin Barnett. It’s also “shown interest in iron ore processing” at Mt. Karara, the statement said.

Anshan Steel is planning an iron ore project at Mt Karara with Gindalbie Metals Ltd. to secure supplies of the steelmaking ingredient to feed expanding capacity. Iron ore producers in Australia have sold shares and brought in Chinese investors as they sought funding amid the global credit crunch.

Anshan Steel is also “keen” to play a role in the Oakajee port development, the statement said. Murchison Metals Ltd. and Mitsubishi Corp. are building a A$4 billion ($3.3 billion) port and rail project at Oakajee, which will open up exports of iron ore from the region in Australia’s mid-west.

Anshan and Gindalbie agreed in September 2007 to invest as much as A$1.8 billion to develop the Karara project.

It is reported that China steel gloom will be coming. Listed steel mills in China are expected to report either declining profit growth or losses for the first half-year period due to sluggish demand, lower steel prices and over capacity.

Twenty-seven listed steel firms have forecast a less-than-rosy performance in the first-half; with 15 companies forecasting losses and 12 predicting declining profits compared to the same period in 2008.

The 27 steel mills, cumulatively, expected to post a loss of 9.64 billion yuan ($1.41 billion), compared to a profit of 36.3 billion yuan during the same period last year.

Angang Steel, which forecast a loss of up to 2.99 billion yuan, ranked as the top loss-maker among the 27 firms.

The company had reported profits of 5.98 billion yuan during the same period a year earlier, helped by markets hungry for steel thanks to the booming domestic economy. It had also reported a profit of 8 million in the first quarter of 2009, indicating that the performance could worsen in the second quarter.

Besides Angang Steel, Baogang Steel, Panzhihua New Steel & Vanadium Company, Taigang Stainless Steel all reported a loss forecast of over 100 million yuan.

“The Chinese steel industry was in the red for the previous seven months until May,” said Wang Xinguang, a steel industry investment manager at private equity firm Hao Capital. “Two-month profits cannot compensate for the loss in the first half-year.”

Chinese steel mills signed an annual iron ore contract at $93 per ton in 2008, up 78 percent from 2007, but in the latter half of 2008, the economic meltdown shrank steel demand and steel prices plunged. As a result, steel mills now cannot charge more to cover their raw material costs, he said. This factor contributed significantly to the loss forecast, he said.

Fan Haibo, a steel analyst at Beijing-based Xinda Securities, said most listed steel firms produced high value-added steel products such as plates, which were usually not in high demand during a downturn.

Small private steel firms produced construction material like deformed steel bars and were more profitable than listed steel mills, he said.

It is reported by the China Iron and Steel Association that China’s steel demand was picking up steadily, driven by the recovery of the manufacturing and property sectors.