Steel makers of China have affirmed that they are determined to have higher price cuts in annual contract negotiations than that which was just settled between Japanese rivals and iron ore suppliers. They maintain that there is oversupply of raw material in steel markets and huge stocks of iron ore are sitting at Chinese ports. Recently, Rio Tinto Group agreed over the 33 percent reduction in their asking prices with Japanese manufacturers of steel.

The association of Chinese Steel manufacturers is discussing the counter measures in order to decide their stance in wake of current deals between Rio Tinto and Nippon. CISA had demanded at least 40 percent reduction in contract prices but it was clearly sabotaged by Japanese manufacturers as they dealt on a smaller price reduction.

In case contract prices are not settled between Chinese steel manufacturers and iron ore producers, it is believed that the companies shall largely rely on purchasing raw material on spot market prices. Some mills are already making purchases from spot markets.