China says that iron ore producers Vale, BHP Billiton and Rio Tinto are threatening supply cuts if steel companies don't accept their price hikes.
“They adopted a threatening policy,” Luo said. “If you don’t accept iron ore prices before a deadline, they threaten to cut supplies. Is this iron ore negotiations?”
Global commodity consumers had better quickly get used to hard bargaining over prices. As the world is being flooded with fiat currencies, commodity producers are going to demand a higher price for their scarce product, as they should. They have no need for monopoly money. If China wants good prices, they should price their contracts in yuan and conduct responsible monetary policy. If they continue to peg to the US dollar, they should expect prices to continue rising because the US central bank is not going to conduct responsible monetary policy.
The World Steel Association called on authorities globally to examine the iron ore market after Brazil’s Vale broke with a 40-year custom of selling on annual contracts and won a 90 percent price increase from Japanese mills. The Chinese government this month said it was investigating the possibility that BHP Billiton, Rio Tinto and Vale may be monopolizing supplies of the steelmaking ingredient.
They can examine and file complaints to their hearts' content. Producer nations are not going to accept trash fiat for hard assets. Not gonna happen.