European steel industry outraged at massive iron ore price hike announcements

Thursday, 11 March 2010 15:35:39 (GMT+2)

On March 11, the European Confederation of Iron and Steel Industries (EUROFER) released a statement expressing the European steel industry's outrage at the announcement by the iron ore industry that it will massively increase iron ore prices by 80 to 90 percent compared to actual price levels for fines and by even more for lumps and pellets.

In its statement, EUROFER has called on European governments to be aware of the implications for the wider economy if these price increases become a reality. The Confederation also emphasized that these price hikes are coming from companies which even in the worst crisis in the world economy in the last 80 years have shown EBIT margins of up to 50 percent per ton.

According to EUROFER, increases of this magnitude will have a significant impact on steel prices and as such on the whole manufacturing and construction value chain and ultimately on the European consumer. This will reduce demand for many price sensitive products and therefore slow economic recovery or even push economies back to recession.

"The steel industry is increasingly concerned at the degree of concentration in the iron ore industry. The European steel industry has already indicated to the European competition authorities our concerns at the excessive pricing power now held by iron ore producers," reads the statement.

EUROFER also reiterated its concerns about the impact of the proposed joint venture of BHP Billiton and Rio Tinto.

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