Posted on 07 Feb 2008
Chinese steel industry officials are starting to suggest they could accept an increase of 30 percent for the year beginning in April, but even that could be hard to win with spot market prices nearly double what they were six months ago.
"I think a 50 percent to 70 percent increase is still possible," said a
Analysts who expected a modest increase months ago now see a rise of more than 50 percent as likely.
Top mining houses BHP Billiton and Rio Tinto, which together supply about 40 percent of
BHP Billiton launched a formal $147 billion (R1.1 trillion) bid for Rio Tinto yesterday, but Aluminium Corporation of China could block the takeover.
Chinese steel mills are expected to resume 2008 price negotiations later this month after the lunar new year holiday, which began yesterday. Mills are under pressure from rising costs for raw materials, including iron ore, coal and coke. A 35 percent rise would increase the cost of making steel by 10.6 percent, according to Helen Lau, a metals analyst for Daiwa.
Officials with the iron ore producers have denied that any firm price is on the table for discussion yet.
Contract iron ore prices have nearly trebled over the past five years, rising 9.5 percent for the current year to between $55 and $63 a ton, free on board, for Australian ore.
Despite a likely US recession and winter transport problems in
