|
|
|
| Miners tell Chinese to dig deeper for iron ore |
|
Publish Time£º2008-09-18¡¡¡¡¡¡¡¡[ Print ]
¡¡¡¡ [ Close ]
|
|
|
|
Rio Tinto and BHP Billiton have asked their Chinese steelmaker customers to accept the largest ever increase in iron ore prices by Monday or risk the interruption of supplies from Australia.
Traders and industry officials said the mining companies have demanded price increases for their annual iron ore contracts in excess of the record 71.5 per cent rise of 2005 and were fighting for increases of 85-95 per cent.
Rio and BHP have warned their Chinese clients some annual contracts will expire on June 30 and would cease supply under the old terms. They have told them the ore would instead be sold into the spot market, where prices are higher.
Analysts said most of Rio's iron ore contracts would expire on June 30. However, some BHP contracts do not expire until September, leaving the latter more time to negotiate and allowing Rio to take the lead in the discussions.
Macquarie, the Australian bank, said Rio was committed to securing a price in excess of the 85-95 per cent the market is expecting. ¡°That stance suggests investors should be prepared for an extended and potentially hostile conclusion to the extended and potentially hostile conclusion to the negotiations,¡± it said in a report.
Rio and BHP are demanding a larger price increase than Brazil's Vale because their proximity to China reduces shipping costs.
Traders said that freight costs from Australia to China collapsed last week by 37 per cent as at least one of the mining companies stopped booking some vessels for July to ship under the old contracts. That move signalled their intention to move shipments into the spot market if the negotiations failed.
Morgan Stanley said in a report that the iron ore market was under ¡°unprecedented¡± pricing developments. ¡°The market remains very tight and in significant deficit.¡±
Rio and BHP declined to comment.
|
|
|
|
|
