Gmail - Iron ore prices went up in 2005(19%), 2006(72%) and 2007(9.5%)

Abstract (Document Summary)

The deals mirror one reached last week between CVRD and China's Shanghai Baosteel Group Corp., an agreement closely watched to see whether it determined 2007's iron-ore price increase for other steelmakers. China, stymied in its effort to set prices for iron ore a year ago, worked this year to take the lead in negotiations. In 4 p.m. composite trading on the New York Stock Exchange yesterday, CVRD's American depositary receipts were trading up 3% to $30.34. In Brazil, CVRD's common shares ended up 2.4% to 64.30 Brazilian reais ($30.01) and its preferred shares ended up 1.8% to 54.63 reais. The ADR's of Posco rose to $84 on the NYSE. Posco will buy 400,000 metric tons, or 440,000 short tons, of coal in 2007 from the Newpac mine from April 1, Resource Pacific said. The volume will increase to 500,000 metric tons annually for the following four years, the Australian company added. The coal price will be agreed upon annually, it said.

Full Text (506 words)

(c) 2006 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission. Agreements between Brazilian mining giant Companhia Vale do Rio Doce and a clutch of Asian steelmakers bolster China's role in influencing prices for some of the world's most-important raw materials. CVRD, as the company is known, reached a deal with South Korean steelmaker Posco to boost prices for iron ore, commonly used to make steel, by 9.5% next year. It also has reached agreements with five Japanese clients, Nippon Steel Corp., JFE Steel Corp., Sumitomo Metal Industries Ltd., Kobe Steel Ltd. and Nisshin Steel Co. The deals mirror one reached last week between CVRD and China's Shanghai Baosteel Group Corp., an agreement closely watched to see whether it determined 2007's iron-ore price increase for other steelmakers. China, stymied in its effort to set prices for iron ore a year ago, worked this year to take the lead in negotiations. Late last week, London-based Rio Tinto PLC reached a similar agreement with Baosteel. Rio Tinto, CVRD and Australia's BHP Billiton Ltd. control 70% of the seaborne iron-ore market. Higher iron-ore prices can put pressure on steelmakers' financial results and affect prices for everything from cars to steel beams used in construction. The 9.5% increase taking hold next year is the smallest in recent years, but many steelmakers argued demand had reached a plateau and prices should be flat. Steelmakers have been moving to restrain their raw-materials costs to continue a three-year period of healthy profits, due in part to surging steel demand from China. Separately, Posco said yesterday it is buying a 10% stake in an Australian mine for 30 million Australian dollars (US$23.4 million) to secure coal for making steel. China's demand has made it a trendsetter in determining prices for world commodities. Surging Chinese demand has helped push up prices for oil to uranium to some agricultural products. The 9.5% increase came in at the top end of market expectations. Most analysts had forecast an increase of 5% to 10% in 2007 price talks. Iron-ore prices climbed 19% in 2006 and 72% in 2005. In 4 p.m. composite trading on the New York Stock Exchange yesterday, CVRD's American depositary receipts were trading up 3% to $30.34. In Brazil, CVRD's common shares ended up 2.4% to 64.30 Brazilian reais ($30.01) and its preferred shares ended up 1.8% to 54.63 reais. The ADR's of Posco rose to $84 on the NYSE. Meanwhile, Posco will pay Australian coal miner Resource Pacific Holdings Ltd. a 10% stake in the joint-venture company that will run Resource Pacific's Newpac mine in New South Wales. "We import 100% of iron ore and metallurgical coal needed for steelmaking and this deal would ensure a stable procurement of raw materials," Posco said in a statement. Posco will buy 400,000 metric tons, or 440,000 short tons, of coal in 2007 from the Newpac mine from April 1, Resource Pacific said. The volume will increase to 500,000 metric tons annually for the following four years, the Australian company added. The coal price will be agreed upon annually, it said.