secures 19 percent increase, page-6

AFX News Limited
BHP Billiton's Goodyear says China iron ore agreement still far off - report
05.23.2006, 10:43 PM



BEIJING (AFX) - An agreement with China over contract iron ore prices remains far off, with BHP Billiton Ltd president Chip Goodyear seeing the need for a halt in negotiations to 'collect our thoughts,' Mysteel.com reported.

'Under the current impasse, it may be best for both sides to step away from the negotiating table for a while,' Goodyear said of the talks, which are still going on nearly two months past the start of the contract year to March 2007.

Recent settlements by major European, Japanese and South Korean steelmakers on a 19 pct iron ore contract price increase have put China under pressure to accept a similar price increase.

China is holding out for a smaller price increase, attempting to use its leverage as a large market with huge long-term growth potential.

Today, Companhia Vale do Rio Doce (CVRD), the world's largest iron ore producer, said it settled on a 19 pct price hike with Taiwan's top steelmaker China Steel Corp, the latest major steel company to come to such an agreement with the Brazilian group.

Baosteel, the sole negotiator for the Chinese steel industry, is in talks with BHP Billiton Ltd, Rio Tinto Group as well as CVRD to set iron ore contract prices for the year to March 2007.