Regardless of the fact that the 2008 iron ore contract prices are coming into effect today, Australian iron ore producers are still battling with Chinese iron ore consumers over the freight rate premium issue.
Australian iron ore miners argue that, since the freight rate from Brazil to China is higher than from Australia to China, a freight rate premium should be added to the contract price for Australian iron ore in order to equalize the end price of Brazilian and Australian iron ore for Chinese consumers.
Meanwhile, Chinese steel producers, which have already agreed on a 65 percent rise in the 2008 iron ore contract price, are reluctant to add any further cost to this rise.
Once the miners and iron ore consumers agree on the 2008 iron ore contact price, the increase will be applied retrospectively from April 1.