On October 10th, it was reported that China’s five leading steel makers, including Shagang Group, Wuhan I/S, Tianjin Steel Group, had made some kind of compromise with Vale regarding price hikes fa small portion ofes. However, officials from all three mills officially denied these rumors. Sources report seniofficials from the three steelmakers said they supported the decision made by the China Iron Steel Association (CISA), would not accept Vale’s unreasonable claim.

Irone prices plummeted due to weak demand. China’s output of crude steel fell fthree straight months since June, depressing demfraw materials. However, most mills traders still increased imports of irone, wrongly predicting the market demfirone in 2H08, causing domestic port inventories to exceed 70 million mt. If the production of 1.0 mt of pig iron requires 1.6 mt ofe, existing port inventories could produce 43.75 million mt of pig iron, equivalent to China’s output of pig iron during August. In this context, Chinese steel makers are in a relatively favorable position by refusing Vale’s price hike.