Japanese steelmaker wants iron ore prices to slide
JFE's CEO lobbies for 2009 contracts at fiscal 2007 levels
By Tom Stundza -- Purchasing, 1/7/2009 12:41:00 PM EST
JFE Steel’s president, Hajime Bada, says the Japanese company, the world's third-biggest steelmaker, wants prices of iron ore and coking coal in fiscal 2009 to fall to at least fiscal 2007 levels due to the precipitous world decline in steel demand. Reuters says Bada tells reporters at a reception for the Japan Iron and Steel Federation that “the fiscal 2007 levels, that's the minimum for us.”
Iron-ore prices have nearly tripled this business year, ending March 31, amid tight supply, but demand for steel has fallen sharply since late last year due to the downturn in the global economy. In a new report, the Fitch Ratings credit-rating agency says that “contract prices for iron ore and metallurgical coal are expected to be 20%−40% lower than the $77/metric ton contract price settled by Companhia Vale do Rio Doce (Vale of Brazil) or the $94/metric tons contract price settled by Rio Tinto (of Australia) last year.”
Major steelmakers in China and Japan (the users of 53% of seaborne iron ore and coking coal) and their suppliers typically set the fiscal-year prices that are charged to smaller steel firms throughout Asia and India. These prices aren’t the same but do set the trends for North American and European import prices of iron ore and metallurgical coal.
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