[miningmx.com] — THE mining industry should consider allowing steelmakers to buy part of their iron ore needs using annual pricing contracts, the world’s top steelmaker ArcelorMittal said on Monday.
Many global producers have shifted to quarterly iron ore pricing, after the collapse of the decades-old annual benchmark system favoured by Chinese steel mills.
“I strongly advocate that the mining industry reflects on short term pricing policy and develops an option for us to buy a part of our volumes at annual prices,” Michael Pfitzner, executive-vice president for commercial coordination and marketing, told a Metal Bulletin steel conference.
“I advocate this even if it results in a mark up of some percent, which I am sure our industrial customers are prepared to accept, if that in turn protects them against unforeseeable price risk,” he added.
As part of its growth strategy, ArcelorMittal is going to focus on quality over quantity.
“Growth in future has to do more with qualitative growth, and less with quantitative growth,” Pfitzner said.
ArcelorMittal hopes to take its own iron ore production to 100 million tonnes in 2015 from 65 million tonnes this year.
Globally, steel demand was expected to increase by 6% in 2011, Pfitzner said.
In the developing world, steel demand for the automotive sector is seen growing by 3.3%, construction by 3% machinery and equipment up by 13% and home appliance sector by 2%, in the first half of 2011 comparing with the first half of 2010.
“In China, we expect construction and automotive to be up by over 9% on a full year comparison (in 2011),” he said
However, in Europe capacity is expected to outweigh demand for at least the next 12-18 months.
“Currently installed capacity in Europe will exceed demand from next 12-18 months, in some parts of Europe, much longer.”
