The CISA has joined Eurofer’s tune to reject intentions by international major iron ore suppliers to hike their prices by 80 percent to 90 percent. Heads of China’s key steelmakers including Baosteel and Wisco jointly submitted last Thursday to the State Council a letter requiring the government to consider the issue of imported iron ore as a country-level strategy. However, as a member of the World Trade Organization, the Chinese government is anxious not to become a lightning rod by overly intervening in the ongoing talks. Data showed 68 medium and large steel producers had an average sales margin of just 2.43 percent last year, both lower than the 5.47 percent averaged for various industries across China and bank’s one-year RMB deposit rate.

Domestic steelmakers may find themselves hard to totally shift the extra cost burden to their customers given the de facto surplus of about 100 million tons of steel capacity and the still slowing recovery from the financial crisis.

Analysts pointed out China can strike back by cutting output, reducing iron ore imports, joining hands with Eurofer and other steel organizations and waging anti-dumping charges against the Rio-BHP duopoly as short-term tactics. But in the long run, the Chinese steel industry can mitigate their reliance on overseas raw materials and achieve sustained development only if it speeds up obsolete elimination, boosts merger and acquisition businesses, enhances the degree of concentration, takes more part in exploring resources in the overseas markets and supports domestic iron ore producers.