[miningmx.com] — Top iron ore miners Vale and Rio Tinto are likely to raise contract prices by 4% for the first quarter from the fourth quarter, reflecting gains in spot prices over the past three months, an official at price provider, The Steel Index, said on Tuesday.
Vale is likely to lift the price of its exported ore with 65.5% iron content to $139.79 a tonne, excluding freight, in the January-March period from $134.38 for the fourth quarter, Rory MacDonald, head of iron ore operations at TSI, told Reuters.
Rio may increase the price of its 61.4% grade iron ore to $133.71 a tonne, excluding freight, for the first quarter from $128.76 in the previous quarter, he said.
“We’re seeing incredibly tight supply in the spot market that hasn’t been alleviated by producers outside of India, and Chinese demand stayed consistently firm, so prices have climbed fairly steadily across the three-month period,” MacDonald said.
The TSI benchmark, based on Chinese iron ore spot prices, averaged $149.6 a tonne, including freight, from the start of September to Nov. 29, up 8% from $138.5 a tonne in the previous three-month period.
Miners ditched a 40-year-old annual pricing scheme and switched to a quarterly system from April this year, using the average spot price in the preceding quarter with a one-month lag, to price contracts.
Unlike Rio and Vale, BHP uses quarters based on the calendar and may not price first-quarter contracts until the end of the current quarter in December, said MacDonald.
Iron ore prices touched a six-month top of $167 a tonne, cost and freight, last week on firm demand from top buyer China and tight Indian supplies after the southern Karnataka state this month upheld a ban on exports of the steelmaking raw material.
Karnataka, which accounts for a quarter of iron ore exports from India, the world’s third-largest supplier, has banned shipments since July in a crackdown on illegal mining.
The likely rise in first-quarter contract prices would follow a decline of at least 10 percent in fourth-quarter rates, the first time prices fell since the shift to the quarterly system in April.
