Baosteel agrees 65% price increase for iron ore

The biggest Chinese manufacturer of steel, Baosteel, agreed Friday to pay for 65 % more for iron ore in Brazil Cia Vale do Rio Doce, for 12 months beginning 1 April 2008.

The prices are as per the benchmark price agreed by manufacturers of steel in Japan and The philipines the 2009 week.

Baosteel consented to pay $ 118.98 per unit of iron ore fines southern system (SSF), up 65 percent last year. He also decided to pay $ 125.17 per unit of iron ore of top class ore from Vale Carajas mine in Brazil, up 71 percent since this past year, the statement on Baosteel's website.

Analysts said Baosteel's acceptance as high as 65 % with the price was of their expectations, pursuing the illustration showing Japanese and South Korean steel, on Monday.

Even so, they said, the iron ore talks were not concluded because worth of another two categories of iron ore, pellet ore and lump ore, have not yet been decided.

"Baosteel still is required to negotiate the expense of the two of these types of ore becauseAustralia Vale de Rio Tinto and BHP Billiton really don't produce both these categories. The cost of pellet ore is expected to equal that of lump ore, "said Hu Kai, an analyst at Umetal.com, which tracks metal prices information.

Baosteel remains chatting with Rio Tinto about five ore categories sufficient reason for BHP about two ore categories.

"The ore talks have a a stalemate, as Rio Tinto and BHP grant applications for transport at sea, while Baosteel seriously isn't in complete agreement," said Gao Bo, an analyst at My website in the steel .

Baosteel is expected to make prices of steel products for any second quarter after this month to pay for the ever rising costs of unprocessed trash. Soaring costs of coal and shipping are combined drive an automobile the expense of coal along with the profits of steel makers squeeze. "

Market insiders believe Baosteel will heighten the price by 10 percent, or about 400 yuan per ton.

Analysts said the increase in steel prices would add costs for other industries which include manufacturers of automatic machines, refrigerators and washing, which rely heavily on steel as raw material. Rising costs could eventually be forwarded to consumers.