Chinese Succumb To 19% Iron Ore Price Hike

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By Rudi Filapek-Vandyck

The longest annual negotiations in history between major producers and suppliers of iron ore and (some of) their customers has finally come to an end (or will do soon).

As had already become clear over the past few weeks, the negotiations have again concluded with a clear victory for Brazil’s Companhia Vale do Rio Doce (CVRD) and Anglo-Australian Rio Tinto (RIO) and BHP Billiton (BHP).

BHP Billiton posted the news on its website overnight, stating it had reached agreement with "a number of its Chinese steel customers" on prices for contracted iron ore tonnage for the 2006 contract year.

Prices increased by 19% over prices negotiated in respect of the 2005 year across the range of lump and fines iron ore products supplied by BHP Billiton, the short statement read.

While the statement still leaves plenty of room for speculation whether all of China’s steel mills have now accepted defeat or not, it would seem this year’s iron ore saga is close to be put to bed, finally.

For those readers interested in looking forward to what is likely to happen next year, we recommend one of our recent stories titled The Revenge Of The Chinese Steel Mills.

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