Brazilian iron ore giant Companhia Vale do Rio Doce (Vale) has announced the conclusion of iron ore price negotiations for 2008 with Germany's largest steelmaker ThyssenKrupp Steel (ThyssenKrupp). The settlement is significant in that it constitutes the first iron ore price agreement with a European steel producer for the 2008 fiscal year.
Accordingly, the iron ore prices agreed by ThyssenKrupp for Southern System Fines (SSF), FOB Tubarão, increased by 65 percent relative to 2007, while the price for Carajas iron ore fines (SFCJ), FOB Ponta da Madeira, increased by 66 percent relative to 2007.
Therefore, the new reference prices per dry metric ton Fe unit for 2008 are US$1.3441 for SSF and US$1.4060 for SFCJ.
According to market analysts, the settlements are likely to set a benchmark for major Chinese steelmakers who may follow the international trend.
The southern mines system accounts for about 38 percent of Vale's total iron ore output, while Carajas alone accounted for 91.7 million mt, or roughly 31 percent of the total 295.9 million mt of iron ore mined in Brazil by Vale in 2007.
Vale currently is developing projects to add new capacities of high quality iron ore to meet its clients' needs, aiming to reach a production capacity of 450 million mt per annum by the end of 2012 through investing in new mines and enlarging its railroad and port infrastructure.