Industry analysts report that the global ore giants have tightened shipments to promote their short-term contract pricing mechanism. As of April 17, iron ore stockpiles in China’s major ports totaled more than 68 million tonness, 820,000 tonnes lower than the prior week, according to the statistics from Chineseport.cn.

Data from Mysteel.com showed that the price of iron ore powder with a purity of 65% imported from Brazil has surged to US$182 per tonne, while high-purity iron ore imported from Australia hit US$185 per tonne, showing 30% price increase compared to pricing in mid-March.

Skyrocketing ore prices have forced some Chinese steel mills to turn to domestic miners. However, the price gap between domestic and imported iron ore powders has now about closed.

Australia-based Rio Tinto Group, the World’s 2nd largest iron ore supplier, announced on April 9 that the company is in talks with customers to switch to quarterly iron ore contracts.

Rio’s move indicates that all three global iron ore giants (Vale SA, Rio Tinto and BHP Billiton) may abandon the year-long contract pricing mechanism for iron ore, a practice that has existed in the industry for 40 yrs.

Some Chinese steel mills believe that the 3 iron ore giants are colluding to fix prices and were tightening shipments to dominate the iron ore pricing negotiation. Facing rising costs, domestic steel mills have no choice but to raise prices of steel products.

A recent survey conducted by Mysteel.com showed that over half of steel dealers believed that steel prices will continue to rise in this week.—Paul A. Ebeling, Jnr. www.livetradingnews.com

Posted by Shayne Heffernan on Apr 20th, 2010and filed underEurope, Latest News, News & Events.You can follow any responses to this entry through theRSS 2.0You can leave a response by filling following comment form or trackback to this entry from your site