China’s dispute with major iron ore producers has backfired, forcing the country’s steel mills to pay prices up to 80% higher than those offered earlier in the year, the South China Morning Post reported. After negotiations with the world’s top three iron ore producers – Vale, Rio Tinto, and BHP Billiton – failed to determine a benchmark price that Chinese steel mills would pay producers, mainland mills have had to pay millions of dollars more on the spot market. While steel mills in Japan, South Korea, and Taiwan agreed on a 33% discount on benchmark iron ore prices, the China Iron and Steel Association (CISA) still sought a 45% discount on the basis that China is the world’s largest steel importer. Volatile spot market prices mean that Chinese firms have paid far more for iron ore than they would have had they been able to reach an agreement with the miners. Elsewhere, CISA Secretary General Shan Shanghua said, "We will not insist on other countries taking China’s iron ore prices as a reference and we will not blindly accept prices agreed to by other countries."
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