Iron ore price negotiations – Japanese likely to accept Rio price
June 26, 2008
June 26th (SteelPrices India) – Jiji Press reported that major Japanese steelmakers are expected to accept a big price increase in Australian iron ore in the face of a price hike deal between Baosteel Group and Rio Tinto.
The report said that Nippon Steel Corp and other Japanese steelmakers have asked Rio Tinto Group and BHP Billiton to set their iron ore prices based on a 65% hike in iron ore prices that the Japanese firms agreed on in February with Brazilian resources giant Vale. But Baosteel recently agreed with Rio Tinto on price hikes of up to 96.5% for this year’s iron ore supplies from the previous year.
The deal is expected to force Japanese steelmakers to accept demands from Rio Tinto and BHP Billiton.
A senior official of a major Japanese steelmaker said that the Baosteel Rio Tinto deal will provide the basis for negotiations between Japanese firms and the British Australian iron ore producers. The two sides are likely to reach an agreement in about a week, the official said.
Japanese steelmakers import some 60% of iron ore they use from Australia. As they do not want to compete with their rivals in emerging economies for iron ore procurement, they are seen to accelerate talks with Rio Tinto and BHP Billiton.