POSCO falls into line Thursday, 28 May 2009Kate HaycockKOREAN...

POSCO falls into line
Thursday, 28 May 2009
Kate Haycock

KOREAN steelmaker POSCO has reportedly agreed to the reduced iron ore prices set between Rio Tinto and Japanese steelmakers earlier this week.

News reports today said POSCO and Rio had agreed to lower benchmark iron prices, two days after Rio officially inked a deal with Nippon Steel.

Under the new agreement, Pilbara blend fines and Yandicoogina fines will now be priced at US97c ($A1.25) per dry metric tonne unit, a reduction of 32.9%, while Pilbara lump blend will be priced at $US1.12/dmtu, 44.4% lower than last year’s prices.

The new prices are for Hamersley iron ore deliveries for the contract year beginning April 1, 2009.

The new price equates to around $US62 per tonne for fines and $US72/t for lump.

Last year’s iron ore price contracts were settled at $1.45 for fines and $2.02 for lump, a record increase of 79.8% and 96.5% respectively.

Analysts speculated the benchmark prices would drop of 20-50% as steel demand weakens in the face of the global economic downturn.

Chinese steel mills are reportedly pushing for greater cuts, and there are indications steel mills and iron ore producers are increasingly moving away from the benchmark pricing system.

The new prices, although lower than last year’s, are still the second highest on record.