3 mining giants to increase iron ore prices by 30%

16:58, June 01, 2010      

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BHP Billiton, Rio Tinto and CVRD, the three mining giants, plan to increase the prices of the raw materials for making steel, including iron ore and coking coal, according to overseas media groups.

The prices of iron ore in the next three quarters will increase 30 percent to 35 percent on average, while the price of coking coal will increase 10 percent to 15 percent.

According to a local newspaper in Brazil, based on the 90 percent to 100 percent increase of iron ore prices in the second quarter of 2010, CVRD will increase its iron ore price by 35 percent beginning in July 2010. The price of coking coal has also increased by 55 percent. In May, the prices of iron ore and coking coal climbed to a new high compared with the last two years.

Insiders pointed out that an increased iron ore price will lead to either an increase in the prices of steel products or a decrease in steel manufacturers' profits. More importantly, the soaring price of raw materials has strengthened global inflation expectations and the rise in iron ore and coking coal prices will stimulate the price of steel products and even that of many daily necessities.

Although 77 large and medium-sized steel enterprises under the China Steel Industry Association (CSIA) had realized profits of nearly 34 billion yuan in the first four months of 2010, which is a 927 percent increase compared with the 4.1 billion yuan of losses in the same period last year, China's steel enterprises will be severely affected and some companies may fall back into deficit due to the decrease in products prices and the increase in cost prices, Luo Bingsheng, vice president of CSIA, said on May 29.

Eckhard Schultz, CEO of world renowned steelmaker ThyssenKrupp, also stated last weekend that the size of the steel industry bubble will probably exceed that of the U.S. housing bubble from two years ago. Without a way to decisively restrain to raw material speculators, they will pose a serious threat to the entire steel industry and even the global economy.

By People's Daily Online


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