China-Australia relations: Beijing steel group demands answers from BHP over soaring iron ore prices
- The China Iron & Steel Association (CISA) says it had a ‘candid exchange of views’ with BHP on soaring iron ore prices on Thursday
- A spike in costs threatens the profitability of Chinese steel plants, which are on track to set a record for crude steel production this year
China’s steel industry body has demanded an explanation from Anglo-Australian miner BHP about the surging cost of iron ore, in a fresh sign of Beijing’s growing frustration about runaway prices for the steelmaking ingredient.
The China Iron & Steel Association (CISA) held a video conference on Thursday with BHP executives in which there was a “candid exchange of views” on the miner’s production, sales and pricing, according to a statement from the industry group.
Luo Tiejun, a CISA vice-president and a former official at the Ministry of Industry and Information Technology, questioned the company about the single day price rise of US$7.5 per tonne on the Platts 62 per cent iron ore index last Friday.
The company agreed to enhance communication with the association to ensure “an open and transparent iron ore market”, according to the briefing, which was attended by BHP’s vice-president of marketing and sales, Rod Dukino, and head of sales for iron ore Rohan Roberts.
BHP was quoted as saying production for the financial year that started in July would be robust and reach the high end of its planned 276 million to 286 million tonnes. It added its shipping plan has not been affected by weather.
The firm, which is headquartered in Melbourne, did not issue a statement after the meeting or immediately reply to enquiries.
The spike in imported iron ore prices threatens the profitability of steel plants in China, which buy nearly 90 per cent of their supply from overseas. Crude steel production is set to reach a record high of 1.05 billion tonnes this year, a global record which accounts for more than 70 per cent of expected global output.