Vale SA, the world’s largest iron ore producer, and BHP Biliton Ltd, the world’s third largest producer, ended a 40-year system of setting annual prices by signing short term contracts with Asian Mills.
In its deal, Vale won a price rise of 90 percent, taking the iron ore price to a new high of $105 a ton, from the $60-62 per ton for contracts ending on March 31.
In its daily market report, Beltone Financial said, “We believe this will cause increased fluctuation in the price of rebars, going forward, as the cost components will see volatility throughout the year, as opposed to the previous year long agreements set by the iron ore producers.
“Specifically on Ezz Steel, we still believe the company will be able to maintain its margins as the local demand dynamics remain healthy, which would support its strategy of increasing its local rebars prices in light of any fluctuating variables in its cost structure.”
