Iron Ore Pricing Mechanism In The Context Of Globalization And The Chinese Iron And Steel Enterprises Countermeasures

China is the largest iron ore importer country in the world. In recent years, with the continuous increasing of iron ore prices, Chinese steel mills have to stand huge cost rise. Criticisms and discussions on iron ore pricing have already become hot topics today. Under this circumstance, the article studies the iron ore pricing mechanism as well as relationship between the upstream industry and the downstream industry, combining practices with some industrial Economy theory. After analysizing different characters of several iron ore pricing mechanism, especially the development and challenges of traditional mechanism, the article makes conclusion as: the annual price negotiation mechanism is stll the most suitable one to settle the iron ore price based on long term cooperation principle, and best benefit both sides in a long term view. But in the more and more turbulent market surrounding, this mechanism needs some improvements to suit itself to the changing background. The article emphasizes the importance of long term cooperation between the upstream industry and the downstream industry as well as the risk sharing mechanism in business. A mid-term adjustment mechanism is suggested to be added into the price negotiation mode to better reflect the market change while keeping the price's stableness. The article also suggests the Chinese steel mills pay more attention to some more important issues to their sustainable development such as investing in foreign resource projects and sourcing iron ore from new channels, instead of the pricing mechanism. Furthermore, the article suggests that government take specific measures to speed up the concentration process of Chinese steel industry, to change China into a powerful country in steel industry.