For interest only. Extracted from this morning's Business Spectator.
Bones ----------------- Reuters 10 Apr 2009
SEOUL - POSCO, the world's No. 4 steelmaker, said it was in a preliminary deal with Rio Tinto for a 20 per cent discount in iron ore term prices, but is seeking for prices to go down even further.
Asian steelmakers are locked in protracted talks to settle contract prices of iron ore for the financial year started April 1 with the world's big three iron ore producers - Vale, BHP Billiton and Rio into.
With Asian firms demanding cuts of between 40-50 per cent to 2007/08 levels, iron ore prices are certain to fall. But a wide price gap has made it uncertain when and at what level it would be agreed.
"Miners are demanding a 20 per cent reduction but we believe it has to go down by 45-50 per cent to 2007/08 levels, as steel market conditions are very poor, especially in Europe and Japan," POSCO senior executive vice president Kwon Young-tae, in charge of raw material procurement, told analysts.
"We want to conclude the deal during April but miners have no reason to hurry up, because benchmark prices are usually settled above spot prices, which are currently quoted above 2007/08 contract level."
Spot iron ore prices are quoted at around $US64 a tonne, sharply lower than last year's contract prices of $US91 a tonne but higher than the 2007/08 level of $US51.
BRM Price at posting:
$1.20 Sentiment: Hold Disclosure: Held
