Mumbai: Iron ore prices are expected to touch record highs with Japanese and South Korean steelmakers agreeing to a 65 per cent increase in iron ore contract prices.

Japan's Nippon Steel Corp and JFE Holdings and South Korea's Posco have agreed to pay Brazilian mining giant Vale $78.90 a tonne starting April 1, up from $47.81 a tonne.

The contract price of iron ore has risen five-fold since 2001.

This year's increase is the sixth consecutive rise, after a 9.5 per cent gain last year, a 19 per cent climb in 2006 and a 71.5 per cent surge in 2005.

The other major global suppliers of iron ore – BHP Billiton and Rio Tinto – are expected to hike prices. Together, the big three control more than 70 per cent of the world's iron ore trade.

Rio is in talks with customers about contract prices for the year were continuing and it would press for a premium based on freight costs.

The hike is expected to hit steelmakers in Mainland China the most. Profit margins of steel companies in China slid to 14 per cent and 4.6 per cent in November last year, from 21.5 per cent and 9.5 per cent in May, respectively.

The new price hike is likely to lead to higher car, ship and building costs.

Platinum also hit record $2,100 an ounce on the back of supply problems in South Africa, the largest producing nation.

Coal prices hit an all-time high last week, gold was at record levels on February 1 and even soft commodities have been breaking new ground with wheat up by 90 per cent over the past month alone on the back of grain shortages and speculative buying.