iron ore market tighter than ever

Iron ore market tighter than ever: Rio




Major miner Rio Tinto Ltd says the iron ore market is tighter than ever, with a significant price increase expected in 2008.

Rio Tinto chief executive of iron ore Sam Walsh told an investor briefing in London on Monday the market was "extremely tight".

"Iron ore demand is strong and is getting stronger," Mr Walsh said.

"The iron ore market is tighter than it is ever been so a very substantial price increase can be anticipated (in 2008)."

Mr Walsh said the company was addressing the freight differential during negotiations with European and Asian steel mills.

The freight premium or freight differential relates to distance.

It is cheaper for Asian steel mills to freight a tonne of iron ore from the Pilbara in Western Australia than from Brazil.

Australian iron ore exporters say Asian steel mills are receiving their ore at a discount and were expected to press for a freight premium to be added to this year's iron ore price.

Mr Walsh also said the company was selling more iron ore into the spot market.

"We are selling more on the spot market and are planning to sell even more," Mr Walsh said.