Iron Ore Imports to Be Paid in Yuan JFE Steel, Baowu Forms JV to Make

China Calling Iron ore imports to be paid in yuan the DCE, Yongfeng will buy some of vivid examples of the gradual transfer Vale’s iron ore fines with settlement of iron ore pricing from overseas based on DCE’s iron ore futures markets to China, experts said. prices for May 2020 delivery as well “In the past, international as a premium/discount, known as a companies mostly referred to basis trading contract. overseas benchmarks, such as “The decision to switch to the Platts benchmark for iron ore and new settlement mode shows that Brent for crude, for pricing in their hina is taking steps to pay Brazil attaches importance to the commodity transactions, including Cfor its huge iron ore imports Chinese market by choosing a more with Chinese companies. This is in yuan, a move experts said shows convenient way to sell iron ore to very abnormal considering the huge a gradual but irreversible trend that Chinese buyers,” Liu Wensheng, market demand from China,” Wu China will play a more decisive role deputy director of the ferrous metal Chenhui, a non-ferrous metals in pricing metal commodities department at First Futures, told the expert, told the Global Times. thanks to the country’s burgeoning Global Times adding that the new China, the largest iron ore market demands. basis trading mode can help importer in the world, imported Brazilian miner Vale SA recently Chinese iron and steel 1.064 billion tons of iron ore in 2018, signed a physical iron ore spot deal manufacturing companies avoid according to customs data released to supply the Shandong-based steel foreign exchange risks. in January. company Shandong Vale SA already began mixed ore But as China surges in LaigangYongfeng Steel Trade Corp production and yuan-denominated economic power and its market using the iron ore price from the spot trading in Chinese ports since demand burgeons further, it is Dalian Commodity Exchange (DCE). 2015 to meet the needs of their end possible that the country will take a This is the first time that an customers in China, according to leading role in the pricing of many overseas miner has used a Chinese the DCE statement. commodities, including iron ore, iron ore futures contract for a spot Vale’s deal with Yongfeng came experts said. trade, a change that the DCE called just weeks after London-based iron Liu said it will be a trend for a “milestone” in enhancing China’s ore miner Rio Tinto signed its first China to play a bigger role in pricing pricing influence. iron ore spot trading contract for iron ore, citing China’s large and According to a statement from denominated in renminbi. Both are still burgeoning market demand. JFE Steel, BaoWu forms JV to make speciality bar FE Steel Corporation and China BaoWu Steel both of which were key factors in the decision to form JGroup’s Guangdong Shaoguan Iron and Steel the new joint venture. Songshan Co Ltd have reached an agreement under In the near future, JFE Steel will enter into a formal which JFE Steel will obtain a 50% share of Baosteel equity-transfer and joint-venture contract with SGIS and Special Steel Shaoguan Co Ltd, thereafter acquire equity in the company once the The joint-venture company will produce and sale of relevant authorities approve the acquisition with respect specialty bar steel. BSSS has a proven record of to competition laws. Supported by JFE Steel’s production producing and selling specialty bar steel in China and and quality-control expertise, the new company is JFE Steel has established a long-term relationship of expected to meet local needs for high-grade specialty trust with the BaoWu Group through other joint ventures, bar steel, with a primary focus on Japanese customers. STEELWORLD 63 November 2019.

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