Chinese
iron ore buyers and the world's major steelmakers are now negotiating the 2007
iron ore prices with the major world suppliers such as
Brazil's Companhia
Vale do Rio Doce (CVRD). As
iron ore is a key element in the manufacture of steel, ore buyers and steelmakers are seeking to set a reasonable price for next year which will reflect the cooling in the steel market. However,
iron ore suppliers are pushing for more increases.
Most steelmakers predict that the
iron ore prices will increase only slightly in 2007 - between 5 to 10 percent - compared to the 19 percent increase in fiscal year 2006 and the unprecedented 71.5 percent increase in fiscal year 2005. Some investment banks, including Morgan Stanley and Merrill Lynch, also expect that prices will rise from 5 to 10 percent. However, Citigroup expect it will decrease by 5 to 10 percent.
Analysts say that
India's export market is one of the factors that will affect
iron ore prices. Its growing number of
iron ore exports from January to September of 2006, which included 46.75 million tons to
China, represented 26.56% of the total
iron ore market. In total,
India is expected to export more than 100 million tons of
iron ore in 2006.