It was stated by Baosteel that the company’s January prices reflected the prices gap of different products but iron ore and steel products’ price cycles are apparently different.

Baosteel said that up to now, the iron ore agreement prices are all annual, and the negotiation has lasted for half a year’s time, while China’s mainstream steelmakers including Baosteel their products prices are monthly based.

For iron ore, global market’s whole supply demand situation plays a crucial role in determining its prices and now the global steel enterprises’ profitability do not bolster iron ore price’ increasing next year.

It is unreasonable to link ore negotiation with Baosteel’s price adjustment. For long term, iron ore reserve is adequate and there is no shortage in supply, just the demand will appear periodical characteristics due to global economic condition change. At different period, iron ore prices will go up and down accordingly.

It is known that on December 10, Baosteel announced their products’ prices for next January and most of the products prices were increased by CNY 300 to CNY 600 per tonne. Afterwards, other steelmakers also lifted their prices. Market players questioned that whether Baosteel’s price up would affect the iron ore negotiation.

It was said from the China Metallurgical Geology Bureau over the weekend that exploration work in the eastern region of north China’s Hebei Province shows potential iron ore reserves in this area are estimated to top 10 billion tons.

A total of 3.44 billion tons of iron ore have been verified in five mines in the province, said Yan Xueyi, the bureau’s director.

The discovery of this deposit would largely ease the shortfall in China’s domestic iron ore supplies and contribute to a sound and sustainable development of the country’s steel industry, according to Yan.

China imported 443.56 million tons of iron ore in 2008, bringing the country’s reliance on imported iron ore to around 50 percent.

The country’s steel mills suffered an unfavorable position during the annual iron ore pricing talks as overseas miners allied to ask for a higher price.

It was reported from the local media that Guangdong Province-based Rixin Development, a privately-owned company, has reached an agreement to buy a majority ownership in a foreign iron ore mine.

Rixin Development inked a deal Saturday to acquire a 70 percent stake in an iron ore mine in Chile, the Guangzhou Daily newspaper reported Sunday. Financial details were not disclosed.

Rixin Development, which declined to release any information about its major businesses or registration, is listed on the local enterprise information website sdwin.com as a “trader for home appliances, textiles, auto parts and so on, and importer and exporter of various products and technologies.”No further information about the company could be found online.

The deal would promote the participation of the country’s qualified privately-owned companies in the overseas mining industry, and might lead to the restructuring of the iron ore importing market in two or three years, said Liu Weidong, general manager of Rixin’s iron ore marketing partner, the Zhuhai-based Guangdong branch of State-owned miner and mineral trader China Minmetals, as quoted by Guangzhou Daily.

Privately-owned companies are in a better position to invest in overseas natural resources, said Li Zihao, president of Rixin, as quoted in the report.

“A government background may trigger alertness when it come to State-owned enterprises buying foreign mines,” said a Beijing-based steel analyst who preferred not to be named. The Chinese government is spurring enterprises to purchase natural resources overseas, especially iron ore.

Chinese State-owned giant Chinalco’s $19.5 billion bid for Aussie iron ore giant Rio Tinto, one of the world’s largest iron ore miners, was disapproved in early April by Rio Tinto’s board.

Privately-owned enterprises are more flexible in dealing-making, said Wang Zhe, a steel analyst with Beijing-based CITICS Securities Research. Wang expects iron ore prices for 2010 to grow more than 10 percent over 2009, as China’s economy keeps recovering and steel production grows.

China produced 560 million tons of steel in the first 10 months of the year, up 15.4 percent from the same period last year, according to figures from the China Iron and Steel Association.