The world's largest iron ore producer Companhia Vale do Rio Doce (Vale) has announced the conclusion of iron ore price negotiations for 2008 with Nippon Steel Corporation (NSC), the largest Japanese steelmaker; POSCO, the largest Korean steelmaker and JFE Steel Corporation (JFE Steel), another Japanese steelmaker.
Accordingly, the iron ore prices for Southern System Fines (SSF), FOB Tubarão, increased by 65 percent relatively to 2007. At the same time, due to its recognized superior quality, it was agreed that the price for Carajás iron ore fines (SFCJ) will have a premium of US$ 0.0619 per dry metric ton Fe unit over the 2008 price for SSF.
Therefore, the new reference prices per dry metric ton Fe unit for 2008 are US$ 1.1898 for SSF and US$ 1.2517 for SFCJ.
As a result, Vale's iron ore price for the 2008 fiscal year has been raised to $78.9/mt FOB from the previous level of $47.81/mt FOB.
The first deal between the large iron ore suppliers and the major steelmaking enterprises usually sets the global benchmark for the contract year.
Meanwhile, Australia-based mining giant Rio Tinto has announced that it is still continuing its negotiations with customers to establish the iron ore prices for the 2008 fiscal year.
In a statement on the issue, Rio Tinto confirmed the announced settlements between Vale and POSCO and Nippon Steel Corporation for Carajas fine ore and Itabira fine ore.
The company also stated that it is seeking customer clarification about these settlements and in particular regarding the settlement for Carajas ore, which is the relevant reference ore for Rio Tinto products. Rio Tinto also said that it will continue to negotiate to obtain a freight premium, to reflect its proximity to Asia and its major customers.