China’s steel mills are resisting efforts by the three major iron ore suppliers to raise contract prices as the European debt crisis has plunged export markets into uncertainty, according to the China Iron & Steel Association (CISA). China Steel Corp said last month that BHP Billiton (BHP.NYSE, BLT.LSE, BHP.ASX), Rio Tinto (RTP.NYSE, RIO.LSE, RIO.ASX) and Vale (VALE.NYSE, VALE3.BOVES) may call for a 30% price increase for the third quarter, Bloomberg reported. Baosteel Group (600019.SH) has since warned that falling steel prices may force mills to reduce output and default on iron ore contracts. “I dare say right now no Chinese steelmakers would accept the third-quarter prices asked,” said Shan Shanghua, general secretary of CISA. Chinese steel prices have fallen 10% from the 18-month high reached mid-April as Beijing moved to curb rein in the property market. Baosteel says demand from car and appliance manufacturers has also slowed. Vale secured a 90% price increase for the second quarter after the annual pricing system ended.
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