CVRD and Arcelor reach iron ore price agreement
The first price deal among worldwide producers and consumers of iron ore has been concluded. According to latest industry reports, Brazilian iron ore producer Companhia Vale do Rio Doce SA (CVRD) and European steel maker Arcelor have reached an agreement on 2003 iron ore prices. The deal set between these companies is $31.95 per iron unit for Carajas Fine (CJF) grade, FOB Ponta da Madeira, Northeast of Brazil. Carajas mines of CVRD are located in northern Brazil. This price deal represents a 9% increase of unit price over last year's agreement. The estimated tonnage to be shipped by CVRD to Arcelor under this agreement is 16 million tons. CVRD might look to supply some tonnage from other producers in order to meet this tonnage due to the tight market for the material. The forecasts of analysts were pointing out to an increase in a range of 5-10% for this year's prices, mainly due to the tight supply of iron ore in the market. The two companies have been negotiating since last December for this agreement. CVRD, still in negotiations with its customers in Asia and Brazil, is looking to obtain around 12% increase. Brazilian giant producer sells about one-third of its output in Europe and one-third in Asia and the balance in the domestic market.