Eurofer balks at CVRD price hike

Eurofer balks at CVRD price hike

Eurofer expressed discontent at CVRD's 90% price hike proposal for 2005 deliveries, claiming that the increase was “totally unreasonable” because no fundamental changes took place in the market in 2004 that would necessitate such an increase. CVRD had raised its prices 18.4% in 2004. European steelmakers will pass on any increase in ore prices to the manufacturing sector, which is already hurting because of tight competition from Asian producers who enjoy lower labor costs. Europe meets 50% of its iron ore supply from the Brazilian mines, most of which belong to CVRD. Therefore, more than half of the steel industry in Europe will be affected by the price increases. Russian steelmakers stand to be the big winners. The Russian companies produce their own iron ore, and therefore will be able to gain the upper hand against both their European and Asian competitors. Australian iron ore producers are eager to see how CVRD responds to Eurofer. Also see: CVRD to increase iron ore prices by 90%