Sounds Like China Is Lying.. So What Else Is New?? (BHP, RTP, VALE)

Chinese steelmakers appear to be gaining back bargaining power over their iron ore contracts the China Iron & Steel Association (CISA) said. Only thing is, I'm not sure how this is true. The facts just don't support the thesis. Since early July, iron ore prices have continued to climb on a resurgence in the steel markets. The world's three largest iron ore miners Rio Tinto RTP, BHP Billiton BHP and Vale SA VALE, are fully exploiting this, taking the opportunity to push forward their new pricing regime. Back in April, the iron ore miners moved to quarterly pricing. The companies previously had annual contracts. This seems like propaganda from the Chinese, according to this report. It claims that the difference between spot prices and the new quarterly contracts will not impact the market much. "But the key problem is that the new pricing mechanism provides larger room for iron ore speculation," one analyst said. This anonymous analyst is spot on, as speculators, hedge funds and other money managers begin to buy iron ore contracts that are just starting to be traded on exchanges. On August 12th, the CFR spot price of Indian 63.5 percent iron ore fines jumped to $155-15$7 per ton, despite market rumors that Rio Tinto had reached the third-quarter agreement of $147 per ton with its Japanese and South Korean customers. The CISA predicts that China's steel producers will be able to reject the ore giants' new price mechanism due to the reversing iron ore supply-demand situation. I just don't see this happening, as China continues to search for iron-ore. Why would Chinalco ACH do a deal with Rio Tinto RTP to secure iron-ore deposits if they didn't need it? So if they need it, how can they reject the market price? The two simply don't add up. Data shows that iron ore imports decreased from April to June. While I have to take the CISA at its word for this, it doesn't show that iron ore important increased in July, and are increasing again this month, as China begins its restocking of the material. To trade this, investors can look at the steel companies, and short them based on increases in iron ore prices. Names that pop out are Arcelor Mittal MT and Steel Dynamics STLD. Go long the iron ore miners, such as Cliffs Natural Resources CLF or even U.S. Steel X, which owns its own iron ore supplies. In addition, any of the major miners, like RTP, BHP or VALE are worth a look on this as well. Sorry China, looks like you're stuck again. Get free trades at tradeMONSTER!