18 February 2008
Asia's top 3 steelmakers agree 65 pct rise in iron ore prces with Vale UPDATE
Asia's three-biggest steelmakers have agreed to a 65 pct increase in iron ore prices following negotiations with Brazil's Vale, the world's biggest iron ore producer, in a move likely to set the global benchmark for the raw material.
JFE Holdings, Nippon Steel and Posco have agreed to pay 78.88 usd a ton for iron ore starting from April 1, also heralding an increase in steel prices.
BHP Billiton and Rio Tinto, the world's second- and third-largest producers, are expected to follow suit. A spokesman for BHP declined to comment on the negotiations, while Rio Tinto could not immediately be reached for comment.
Steelmakers agreed last year to a 9.5 pct increase in iron ore prices but since then spot prices have jumped about 150 pct as demand has soared, leading the market to expect an increase of about 60 pct in the contract price this year. A 65 pct jump is the second biggest rise after 2005's 71 pct spike.
Demand for iron ore, a key material in steel, has soared due to growing demand led by a construction boom in China and India.
Steelmakers also face increasing costs for coal and coke.
Ko Min-Jin, a spokeswoman for Posco, said the group will consider raising prices of its products after completing negotiations with other miners.
Katsuaki Watanabe, president of Toyota Motor Corp, said Japan's top-ranked automaker had no immediate plans to raise car prices.
At 9.25 am, shares in Rio Tinto were up 74 pence, or 1.4 pct, at 5,567 pence, while BHP was up 24p, or 1.6 pct, at 1,575p. – Thomson Financial
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