21 Jul 2010 10:28

WISCO sets 2010 iron ore contract price with CV

Shanghai. July 21. INTERFAX-CHINA - Wuhan Iron and Steel (Group) Corp. (WISCO) announced on July 21 that it has agreed a 2010 long-term iron ore contract price with Venezuelan iron ore miner Corporacion Venezolana de Guayana (CVG).

According to the announcement, the 2010 iron ore contract price agreed upon by the two parties is at least $20 lower than the prices set by Vale in negotiations with Japanese and South Korean steel mills in the first three quarters of the year. The new price will save WISCO RMB 400 million ($59 million).

WISCO representatives declined to comment when contacted by Interfax, but Mysteel analyst Yu Ying estimates that the contract price is around $125 per ton.

WISCO signed a 7-year long-term iron ore offtake contract with CVG in October 2009, under which WISCO will receive over 40 million tons of iron ore from CVG.

In 2009, WISCO purchased more than 480,000 tons of iron ore from CVG at an average delivered duty paid (DDP) price of RMB 668 ($98.52) per dry ton, which saw the company cut production costs by RMB 152 million ($22.42 million).

- XH