Iron Ore Price Rise Has China, Europe Worried (VALE, BHP, RTP)
Steelmakers forced to buy from smaller producers on the volatile spot market
Iron ore negotiations have ground to a halt - again.
Iron ore producers and consumers were so far apart last year that negotiations on pricing broke down entirely. No price benchmark was reached between major Australian iron ore miners and China's steel mills.
Instead, steelmakers resorted to buying their iron ore from smaller producers on the volatile spot market. And they may have to do the same thing again this year.
That's because iron ore producers - led by Brazil's Vale SA (NYSE: VALE) and Australian juggernauts BHP Billiton (NYSE: BHP) and Rio Tinto PLC (NYSE: RTP) - are reportedly looking for an increase of as much as 90% in the benchmark price.
"The negotiations are difficult. These miners hope for a large rise" in the 2010 benchmark price of iron ore, said Deng Qilin, the chairman of both the China Iron and Steel Association and the Wuhan Iron & Steel Group. "We can't digest the pressure of what they're asking us."
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