Rio Tinto Group and BHP Billiton Ltd., the world’s second- and third-largest iron ore exporters, may raise contract prices about 23 percent in the second quarter from the first as spot prices hit a record, according to calculations based on The Steel Index pricing.
The price of 62-percent iron ore arriving at Tianjin port averaged $178.03 a metric ton, including shipping, from Dec. 1 to Feb. 24, compared with $149.91 in the previous three months, according to The Steel Index. The price rose to $191.9 a ton on Feb. 16, the highest level since the data became available in November 2008. Average shipping costs fell to $7.3 a ton in the December-February period from $11.26 in previous three months.
Steel prices in China climbed to 4,961 yuan a metric ton on Feb. 15, the highest since Sept. 2008, enabling steelmakers to expand profit margins and pass on higher raw material costs.
“With the quarterly price hike, Chinese steelmakers are still making profits under the current steel prices,” said Henry Liu, a Hong Kong-based analyst with Mirae Asset Securities Co. “But steel prices may incur a substantial correction in April due to increasing credit curbs and an industry overcapacity.”
Quarterly prices are typically based on figures derived by deducting freight costs from the three-month average of iron ore price indexes provided either by The Steel Index, Platts or Metal Bulletin with a one-month lag period.
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