Kobe Steel signs iron ore contract at 13 per cent less with Rio Tinto
09 Sep 2010
Japan's Kobe Steel today said that it has signed iron ore purchase contract with Anglo Australian miner Rio Tinto for a 13 per cent reduction in price for October-December period from the previous quarter.
The Japanese steelmaker however did not reveal the price it signed the quarterly contract for, though analysts surmise that Kobe steel must had agreed to pay between $125 and $130 per tonne.
In the July-September quarter, Japanese steelmakers had signed contracts with Rio Tinto, BHP Billiton and Vale at prices ranging from $145 to $150 per tonne. (See: Iron ore mining giants to raise prices once again)
Rio Tinto's chief, Sam Walsh had hinted last week that with a falling demand from China, iron ore prices may take a hit by as much as 13 per cent to $127 per tonne.
In late March 2010 Vale and BHP Billiton had made a breakthrough in trashing the old annual iron ore benchmark system by getting the Japanese steel mills to break ranks with China in their traditional joint negotiations, to agree to a quarterly system.
The quarterly pricing has reaped immense profits for the iron ore mining companies, which posted record quarterly profits last month.
Rio Tinto's iron ore sales generated $4.1 billion in the first six months of this year.
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