ore price hike, page-2

China agrees early to iron ore price hike
Andrew Trounson
December 22, 2006

AUSTRALIA'S export earnings are set to get another boost after China yesterday caved-in on a 9.5 per cent increase in benchmark 2007-08 iron ore prices.
It is the first time that Chinese steel mills have settled the benchmark price ahead of traditional steel powers Japan and Europe, and underscores China's emergence as the dominant customer for iron ore.

But they have been forced to pay up for the privilege, and in quick time. The price agreement for iron ore fines or powders from Brazil's CVRD, the world's biggest iron ore producer, is the earliest settlement in more than 10 years.

Last year, prices weren't settled until May and had to be backdated to the April 1 contract start date, as Chinese steel mills strenuously refused to accept a proposed 19 per cent price. But their resistance was ultimately undermined when European and Japanese mills accepted the increase.

The increased means the price of iron ore has risen by over 120 per cent per cent in just three years.

BHP and Rio have yet to confirm the price increase, but are expected to settle prices for iron ore fines in line with the Brazilian deal.

However it is unclear whether the price of premium Australian lump iron ore will increase as much as fines.