CVRD Achieves 19% Iron Ore Price Increase

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By Rudi Filapek-Vandyck

The world’s number one when it comes to producing iron ore, Brazil’s Companhia Vale do Rio Doce (CVRD) has announced it has concluded its iron ore price negotiations for 2006 with Germany’s largest steel maker and major customer Thyssen Krupp Stahl resulting in a price increase for iron ore deliveries by 19% compared to 2005’s price agreement.

The outcome of the negotiations bodes well for current negotiations with Chinese steel producers, which include BHP Billiton (BHP) and Rio Tinto (RIO), although there is no certainty the Chinese will accept the agreement between CVRD and Thyssen Krupp as a guide.

So far, most of the market experts seemed to expect a price increase between 10-15% for the coming year.

The CVRD announcement said the agreement with Thyssen Krupp is for ore prices for Carajas (SFCJ) and Southern System (SSF) fines to increased by 19.0% relatively to 2005 while blast furnace pellets, both from Tubarao and Sao Luis, will be reduced in price by 3.0%.

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