BHP, Rio settle iron ore prices with Europe-report

July 15, 2008

July 15th (Reuters) – Australia’s two leading iron ore producers, BHP Billiton Ltd (BHP.AX: Quote, Profile, Research)(BLT.L: Quote, Profile, Research) and Rio Tinto Ltd (RIO.AX: Quote, Profile, Research)(RIO.L: Quote, Profile, Research), have settled on a 71 percent rise in iron ore contract prices with European steel mills, an Australian newspaper reported on Tuesday.

The reported price rises are less than the near doubling of prices agreed with Asian steel mills but are in line with prices agreed with Brazil’s Vale (VALE5.SA: Quote, Profile, Research)(RIO.N: Quote, Profile, Research) in March.

 

BHP and Rio Tinto both declined to confirm the deals on Tuesday.

 

The Australian newspaper reported that BHP agreed to receive the same for its iron ore from steel giant ArcelorMittal (ISPA.AS: Quote, Profile, Research) that Vale had secured.

 

The two Australian producers earlier this month struck deals with Chinese and Japanese steel mills for a 96.5 percent increase in lump iron ore and a 79.88 percent increase for fine iron ore shipments in 2008/09.

 

BHP sends less than 2 percent of its iron ore to Europe. The Australian newspaper said the company is keen to show that it is a price taker in Europe where it is seeking European Commission approval for a $160 billion hostile takeover bid for Rio Tinto.

 

Rio Tinto said it had settled European iron ore contracts, but as the market made up only about 3 percent of its sales from Western Australia’s Pilbara, it would not reveal the extent of its price rises.

 

Prices varied with customers’ freight arrangements, a spokeswoman said.

 

Australian iron ore producers do not have the same freight advantage to Europe as they command over Vale with sales to Asia.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: