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09. July 2008

Japan steelmakers sign iron ore pact with BHP

TOKYO - Japan's top four steelmakers, including the world's No 2 Nippon Steel Corp, said they have struck a deal with BHP Billiton on a near doubling of contract iron ore prices this business year.

The Japanese companies - including JFE Holdings Inc, Sumitomo Metal Industries Ltd and Kobe Steel Ltd - said they signed an agreement with BHP on Monday to pay 96.5% more for iron ore lumps and 79.88% more for fine ores.

BHP secured a deal from China's Baosteel, saying it would roll that out to other customers in Asia.

The deal matches BHP rival Rio Tinto's pact agreed with steelmakers last month.

It is the sixth year in a row that iron ore prices have climbed, for a seven-fold increase since 2000.

The world's biggest iron producer Vale, based in Brazil, agreed in February to a 65% to 71% rise. But Rio and BHP had argued that soaring freight rates made Australian ore much cheaper relative to Brazilian grades due to the proximity to customers in Asia.

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