Urgent need for global competition investigation into iron ore market - World Steel Association

05 April 2010 | 05:09 Code : 19885 Geoscience events
The steel industry believes that imposed iron ore contracts will have a negative....

The steel industry believes that imposed iron ore contracts will have a negative impact on the global economic recovery and that authorities worldwide should examine the iron ore market, an industry body said on Thursday. "There is now an urgent need for the competition authorities around the world to examine the market for iron ore, and the market behaviour of the three companies who dominate the business," Ian Christmas, World Steel Association’s Director General said.Worldsteel’s call followed steel industry body Eurofer and European auto manufacturers association ACEA who pressed European Union regulators on Wednesday to prevent unfair competition and excessive pricing of iron ore.World Steel Association represents approximately 180 steel producers around the world and its members produce around 85 percent of all steel.The world’s top three iron ore miners -- Brazil’s Vale (VALE5.SA: Quote), BHP Billiton (BLT.L: Quote) and Rio Tinto (RIO.L: Quote) -- who have the upper hand in the $80 billion iron ore business are pushing for a revamp of the decades-old annual benchmark system.According to Worldsteel data, the trio controls 68.5 percent of the total annual seaborne iron ore market.BHP Billiton and Vale have already clinched deals with Japanese steelmakers to sell them the key steelmaking ingredient on a quarterly basis but they are facing fierce resistance from European steelmakers, who oppose changes to annual contracts with their own customers."The benchmark system may have imperfections but it has the merit of supporting long-term relationships between the steel industry and raw materials suppliers leading to beneficial medium-term investment decisions," Christmas said.

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