Iron ore price talks still ongoing

Annual iron ore contract talks which have been going on for a long while between Chinese steelmakers and global iron ore suppliers could not be concluded yet. Normally, new contract prices would be determined to be valid as of April 1, 2006, however this year, no agreement could be reached even though we are approaching to the end of April. The reason that took the talks so long is, the persistence of Chinese authorities, who have undertaken the negotiation task on annual prices for the first time this year, on a 10 percent increase. It is known that ore producers are demanding a 2-25 percent increase. Although a conclusion has not yet been reached, the sales made after April 1, 2006 will be deemed as sold over at the new price level. Nevertheless, the purchasers and sellers are currently concluding their businesses according to 2005 prices, being open to modifications according to the increase rate to be announced later. The price levels that Chinese mills are to agree upon will also be accepted by the steel mills in Europe, America, Japan and South Korea. These countries are also awaiting the outcome of the talks. Many steel mills have complains about the acceptance of 71.5% increase by Japan in 2005. This year, when signing the iron ore contracts, Japan will only indicate the quantity, while the prices will be according to the result of the price negotiations.