Brazil's Vale hikes contract prices of iron ore by 65 per cent

21 February 2008

Mumbai: Iron ore prices are expected to touch record highs with Japanese and South Korean steelmakers agreeing to a 65 per cent increase in iron ore contract prices.

Japan's Nippon Steel Corp and JFE Holdings and South Korea's Posco have agreed to pay Brazilian mining giant Vale $78.90 a tonne starting April 1, up from $47.81 a tonne.

The contract price of iron ore has risen five-fold since 2001.

This year's increase is the sixth consecutive rise, after a 9.5 per cent gain last year, a 19 per cent climb in 2006 and a 71.5 per cent surge in 2005.

The other major global suppliers of iron ore – BHP Billiton and Rio Tinto – are expected to hike prices. Together, the big three control more than 70 per cent of the world's iron ore trade.

Rio is in talks with customers about contract prices for the year were continuing and it would press for a premium based on freight costs.