Global miner Rio Tinto said Monday it was still discussing 2008 iron ore prices with customers after rival Vale of Brazil won a massive 65 percent increase from its Asian clients. Demand for iron ore has soared due to growing demand for steel led by a construction boom in China and India.
"Rio Tinto is currently in negotiations with customers to establish the prices it will receive for iron ore for the 2008 year. These discussions are continuing," chief executive Sam Walsh said in a statement which noted the Vale deal."The group is seeking further customer clarification about the settlements," he added.
"In any event, Rio Tinto will continue to negotiate to obtain a freight premium, to reflect its proximity to Asia and its major customers." Earlier Monday, it emerged that Japanese steelmakers JFE Steel and Nippon Steel, and South Korea's POSCO had reached a deal with Brazilian iron ore leader Vale for the year starting April 1.
BHP Billiton and Rio Tinto, the world's second- and third-largest iron producers, are widely expected to follow suit but much may depend on Chinese steel mills who count among the world's biggest customers.
China has in the past strongly opposed large increases in iron ore prices - most notably 71.5 percent in 2005. For the following year, steelmakers agreed a 9.5 percent price increase in iron ore prices, largely as a result of Chinese opposition to paying more.
Since then, however, spot prices have soared in line with demand, driven by largely by China's booming economy. "The steel market remains very tight as demand for steel products in the world, namely China, is still growing rapidly," a Nippon Steel spokeswoman said.
Nippon Steel - second globally to Arcelor-Mittal - said it was the sixth straight year that the cost had gone up. In Seoul, POSCO spokeswoman Ko Min-Jin said BHP Billiton and Rio Tinto were expected to follow with similar agreements.