Iron ore mining giants to raise prices once again
31 May 2010
Global mining giants led by Vale of Brazil, the world's biggest iron ore miner, are once again planning to raise iron ore prices by as much as 35 per cent to $145 a tonne for the next quarter as the current quarterly contract prices are well below the spot market price.
Vale and Anglo Australian mining giants Rio Tinto and BHP Billiton are said to be demanding a hike in iron ore prices for the coming July quarter after the 90 per cent-100 per cent increase in the newly formed quarterly contracts signed in April with Asian steel makers (See: BHP, Vale wrangle quarterly iron ore deal with Japan, Vale gets 90-per cent hike and BHP Billiton almost doubles iron ore price for Asian steelmakers)
Adopting an aggressive stance this year, the Rio de Janeiro-based Vale with $28.6 billion in revenues last year and a net income of $5.8 billion, will raise the price of iron ore by 30-35 per cent, said the Brazilian newspaper O Estado de Sao Paulo yesterday, without revealing the source of its information..
But hiking the price for the next quarter has been anticipated by analysts since there had been no let up to the ore demand from China, the world's biggest consumer and importer of iron ore.
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.
Vale, which earned 58 per cent of its 2009 revenues from sale of iron ore, today struck a deal with Japan's Nippon Steel and Sumitomo Metal Industries to sell iron ore at $100 to $110 a metric ton for the quarter commencing 1 April - a 90-per cent rate hike from the year earlier annual benchmark contract price.
