China eyes long-term iron ore deal with India as prices look north

22 February 2008

Mumbai: China has proposed a long-term agreement with India for importing iron ore to meet its growing demand even as spot prices of the mineral in India are set to rise in line with global trends.

China made the proposal during a meeting between officials from India's Steel Ministry and the Chinese Ministry of Commerce.

China's Baosteel has recently contracted to a 65 per cent hike in the contract price of iron ore to be bought from Brazilian mining giant Companhia Vale do Rio Doce (Vale).

In a regulatory filing, Vale said Baosteel had agreed to a 65  per cent increase for Southern System iron ore fines, and a 71 per cent price hike for higher-quality Carajas iron ore fines. The price increase will go into effect April 1.

Beijing has long-term arrangements with Australia and Brazil and wants to enter into a similar agreement with India.

International iron ore prices on long-term contracts are rising and India steelmakers would also feel the pinch.