[Flash News] Iron Ore

9 04 2010

The last weeks have been quite eventful on the iron ore front. I am quite sceptical of my capacity to aggregate all of the important breakthroughs in a single entry so instead I will just lead you to where the good reads are.

Regulatory affairs

In response to the announce of Vale and BHP Billiton’s pricing agreement with Japanese steel mills, steel makers have called for greater scrutiny from competition agencies around the world. Excessive pricing of the big three iron ore producers is of issue. Worldsteel has pressed for such an investigation to take place imminently and has been supported by Eurofer and the European Automobile Manufacturers’ Association. Mineweb

Eurofer’s request for investigation to the European competition authorities met with scepticism by Vale who requested that Eurofer members be investigated for coordinating their approaches in negotiating with the Brazilian firm. Morning Star

On other competition matters, Australia’s Competition and Consumer Commission is further postponing the review of Rio Tinto and BHP Billiton’s Pilbara joint venture. Concerns about the ability of the firms to control supply and to coordinate supply with Vale persist. Reuters

Pricing & Benchmarks

Vale signs 90 per cent increase with Japanese steel makers. Business Insider
Quarterly Pricing, it’s on! 90% of iron ore sold by Vale through contracts is now following quarterly price adjustments. Business Week.

There might however still be value in longer term contracts. “Don’t write them off yet”. Financial Times.

China would like to keep the annual benchmark system intact and include smaller mills, currently purchasing iron ore at spot prices, under such a system. Mining Weekly

Increasing input costs will be passed onto consumers and “may push steel rates up by 21%” according to Lakshmi Mittal. Business Week




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