BHP Billiton Ltd abandoned a bid for rival Rio Tinto Group, a move which was anticipated and would benefit Chinese steel makers, domestic industry sources said.
"BHP's decision just underscores the current global market turmoil," said Lu Youqing, vice president at Chinalco, which together with Alcoa of the United States bought 9 percent in Rio in February.
Chinalco, a state-owned diversified metals company and parent of top Chinese aluminum maker Chalco, is now Rio's largest shareholder. Its stake purchase in Rio has been widely considered a move to derail BHP's hostile bid for Rio.
"It will be good for China's steel industry," Lu said yesterday of BHP's withdrawal, adding Chinalco hasn't studied a plan to change its stake in Rio so far.
As BHP withdrew its bid, the pressure on Chinese mills in the new round of iron ore term price talks will be greatly eased, said Sun Yong, an analyst at China Galaxy Securities.
Prices should drop next year as demand falls amid a global slowdown, analysts have said. "Contract prices may fall by as much as 40 percent next year," Sun said.
(Shanghai Daily November 25, 2008)
