* * * * * J B K * * * * *
San Francisco
Steelmakers agree to new iron ore contracts
Global miners and key Asian steelmakers have agreed to a record increase in iron ore prices after they signed deals to replace the 40-year-old pricing system based on annual contracts with new short-term deals linked to the spot market.
The landmark move by Vale of Brazil and Anglo-Australian BHP Billiton ends the so-called benchmark system which has been in place since the early 1960s. Rio Tinto has yet to sign any new contract, but executives expect it to follow soon.
Iron ore is the main ingredient used to make steel. The new agreements meant that steelmakers would pay about $110-$120 a tonne next quarter for their iron ore, a 90-100 per cent increase from the $60 level at which the 2009-10 annual contracts were settled, industry executives said. Prices are likely to rise again later in the year.
http://www.ft.com/cms/s/0/d15d7758-3bad-11df-a4c0-00144feabdc0.html
