According to a joint statement from Germany's industrial union of metalworkers IG Metall and German steel federation Wirtschaftsvereinigung Stahl (WV Stahl) regarding the current situation in the iron ore market, the demands for price increases of up to 100 percent for iron ore will cost the German steel industry over three billion euro, which is approximately double the investments in domestic steel facilities at 1.6 billion euros. Price increases are said to be a serious threat to the fragile recovery in the steel industry and the economy in Germany as a whole.
In the statement, it is emphasized that the huge market power of large miners, coupled with growing demand from emerging economies, particularly in Asia, result in dramatic developments in the commodity markets.
Under these conditions, IG Metall union and WV Stahl demand more attention for the policy on risks in the supply structure of raw materials in Germany, and resolute countermeasures against a further concentration in the international commodity markets.
"The EU is urged to press ahead with the renewal of European financial regulation to prevent economic damage caused by an inordinate financial speculation. Hedging activities that focus not on speculation, but serve the industry to compensate for price fluctuations in the commodity markets, may not be limited or expensive," the statement reads.
The German steel industry has also demanded fair pricing conditions for raw materials and the preservation of the established one-year benchmark contracts, instead of short-term contracts, to avoid volatile prices, higher procurement costs and a lower predictability for the entire value chain.