Reason Of China's Losing Right Of Setting Price In International Iron Ore Trade And Countermeasures

The iron ore market is one of the most centralized market in larger commodity. As one resource, it influences the existing of the steel-iron, and the development of the relevant industry. So we can see the price of iron ore is relevant to the life of country and the people, and attract our attention. As the center of world steel iron in 50-80's last century, EU and Japan monopolize the negotiations right of international iron ore production in the past 30 years. According to the international practice, in the negotiation between the demand part (including EU Japan and China) and the three largest iron ore suppliers, any two parts reach a result which will be accepted by all the other parts. Every time, china can only accept it. In 2003, the amount of iron ore china imported reached 1/3 of the world total, and was the largest importer in iron ore trading. In 2006, the amount was the total of EU and Japan. So in the suppliers' eyes, china plays a decisive role in this market. It is unreasonable if this larger demander still move around the chess door of price negotiation. But historical usage doesn't change with the trading pattern. Having the biggest demand and being the largest importer, why no "Chinese price" in iron ore import area? The increasing price has had a bad effect on many developing industries, such as shipbuilding industry, construction & mechanical, automobile industry, real estate. It is important for us to settle this question. This text first states the process of price negotiation in 2005, 2006 and 2007, then gets the problem- china's losing right of setting price in international iron ore trade. Owing to the existing of this question, hereby author uses specific data, game theory and trading model to explain the reason that Chinese steel incorporations lost their right of making price in global iron ore trade. Finally, the paper puts forward some suggestions and countermeasures.