Surging spot prices of iron ore delivered to China have further...

Surging spot prices of iron ore delivered to China have further complicated this year's negotiations with key suppliers.

Price of the 63.5 percent iron-content ore rose to $129 per ton including freight yesterday, after India raised taxes on exports, up 6 percent from last week and more than 50 percent higher than the 2009 benchmark price reached by Australia's Rio Tinto, BHP Billiton, and Brazil's Vale with Asian steelmakers.

The bulk of the iron ore delivered to Tianjin port yesterday was from India, with hardly any supplies from Australia and Brazil, according to data from industry information provider worldbulk.net.

Industry insiders said the rising spot prices and dwindling supplies from the three global miners have put pressure on the benchmark price.

The country's top iron ore negotiator, China Iron and Steel Association (CISA), for the first time admitted that the price rises would complicate negotiations.

Luo Bingsheng, vice-president of CISA, said he expects foreign iron ore miners to seek a 20-30 percent increase in the benchmark iron ore price for 2010. Given the fact that the country is committed to increase steel production this year, it makes the iron ore negotiations difficult for Chinese steel mills, according to the China Securities Journal.