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| Miners pushing steelmakers to accept record price for 2010-11 annual iron ore contracts |
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- 2010 February 16
The global mining companies are pushing steelmakers to accept a record price for iron ore for the 2010-11 annual contracts, risking a repetition of last year’s stand off with China.
FT has learnt that “If the miners get their way, prices could be settled at, or even above, USD 90 a tonne, the record level at which the 2008-09 annual contracts were settled, sharply higher than the USD 60 agreed for 2009-10.”
The report added that 50% increase to USD 90 will be well above the market consensus for a 30% to 40% rise but some senior mining executives have suggested that the increase could be far larger, with talk of a 70% to 90% rise.
The report cited a senior mining executive as saying that “Why on earth should we agree to anything different but spot prices?. The miners would rather sell on the spot market than settle for a low price in annual contracts.”
Another executive said analysts’ forecast of a deal at 30% to 40% could be wrong as the market is very tight.
The push for a record price would be strongly opposed by steelmakers and mining executives are braced for difficult talks. One executive said “This year is seriously hard. Even harder than last year.”
The miners are betting that spot prices will remain high throughout the year, supported by strong demand from China, the reactivation of blast furnaces elsewhere, and new ore export taxes in India, the world’s third largest exporter.
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