Iron ore prices will rise between 5% and 10%
By Tom Stundza -- Purchasing, 12/6/2006 9:02:00 AM
As talks began last week between the world's major steelmakers and iron-ore producers to set prices for the next fiscal year, starting in April, consensus is building that the 19% increase of this year won't be repeated. Iron ore is a crucial ingredient for making steel. Merrill Lynch analyst David Hall says iron ore prices will rise 5% next year while UBS economist David Brebner sees prices rising 10%.
A story in the Wall Street Journal (registration required) points out that higher iron-ore costs could pressure steelmakers' financial results.
Iron ore prices increased by 19% in fiscal 2006 after spiking an unprecedented 71.5% in fiscal 2005. Steelmakers and iron-ore producers already are clashing publicly over fiscal 2007 prices, with some steel companies still saying the price of iron ore has reached an apex and iron-ore companies suggesting it hasn't.
In a mid-November Reuters report, the world’s third-largest steelmaker POSCO said it expects iron ore prices to be up less than 10%. "Steel products prices are likely to be weak early next year due to seasonal reasons but the prices will recover from late February," said. Kim Young-keun, general manager of the company's Investor Relations Group.
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