China: Chinese steel makers willing to accept 65 pct rise in price of iron ore

22 February 2008

Beijing, China, 22 Feb – The 65 percent rise in the price of iron ore that Brazilian mining company Vale will sell to Japan and South Korea establishes a precedent that Chinese companies are expected to accept, the Chinese press reported Thursday.

The price rise that Vale negotiated with Japan’s Nippon Steel and JFE Steel and South Korea’s POSCO, will establish a standard global market price for the ore in 2008, according to Chinese state news agency New China, which cited an analyst from the website.

Baosteel, China’s largest iron and steel manufacturer, represents China’s producers in negotiating the price of iron ore with the main world suppliers, in a process that is still underway.

However, New China reported, citing analyst Hou Wei, “the biggest manufacturers of steel in the country may follow the example of Japanese and South Korean companies and accepting a rise of 65 percent, according to previous international practices.”

Vale, the world’s largest producer of iron ore has concluded iron ore price negotiations for 2008 with Germany’s largest steel maker, ThyssenKrupp Steel, in which they agreed on a 65 percent increase in the price.

Brazil is the third-largest supplier of iron ore to China, which is the world’s largest consumer of the resource, and is responsible for over 40 percent of global imports.

Vale is the vehicle for Brazilian exports of iron ore to China.

According to the Chinese Trade Ministry, Brazilian iron ore exports to China exceeded 100 million tons for the first time in 2007, a rise of 6 percent against 2006.

In 2007 China produced a total of 489.2 million tons of raw steel ad 469.4 million tons of iron, a rise of over 15 percent against 2006.

Steel exports rose 58 percent, reaching 54.88 million tons, according to the same figures. (macauhub)