ArcelorMittal agrees to 65 pct iron ore price hike with Vale - Metals News - Metals Place

ArcelorMittal agrees to 65 pct iron ore price hike with Vale - Metals News - Metals Place

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7 March 2008
ArcelorMittal agrees to 65 pct iron ore price hike with Vale

ArcelorMittal, the world's largest steelmaker, has agreed on a 65 percent iron ore price increase for 2008 with the world's largest iron ore producer Vale, Vale announced yesterday. According to the agreement, the FOB price for Southern System fines (SSF) will increase 65 percent year-on-year this year, while the superior quality Carajas iron ore fines (SFCJ) will be sold at a premium of $0.0619 per Fe unit over SSF prices.

ArcelorMittal's settlement follows similar agreements between Vale and Japan's major steel mills, namely Nippon Steel, JFE Steel, Nisshin Steel, Sumitomo Metals and Kobe Steel, Germany's ThyssenKrupp AG, South Korea's Pohang Steel Co. Ltd. (POSCO), Italy's Ilva S.P.A., China's Baosteel Group and Taiwan's China Steel Corp.

This year's per Fe unit reference price for ArcelorMittal will be $1.3441 for SSF and $1.4060 for SFCJ, the same as Europe's ThyseenKrupp AG and Ilva. While Asian steel mills will be charged $1.1898 per Fe unit for SSF and $1.2517 per Fe unit for SFCJ.

Many steel mills have already responded to the iron ore price hike by raising steel product prices.

The magnitude of the price increase for 2008 reflects the continuity of very tight conditions still prevailing in the global iron ore market, Vale announced.

Vale expanded its iron ore production at an average rate of 14.1 percent per annum between 2001 and 2007, and aims to reach a production capacity of 450 million tons per year by the end of 2012.

Vale's Itaguai maritime terminal (Itaguai), in the Brazilian state of Rio de Janeiro, resumed its normal 25 million-ton per annum iron ore shipload capacity on Feb. 29. The Itaguai terminal had experienced operational restrictions from equipment problems since mid-December last year. – Interfax