(Xinhua)
Updated: 2008-02-19 15:51

BEIJING -- The massive 65 percent price rise in iron ore agreed between Japanese and Korean steelmakers and leading Brazilian iron ore supplier Vale could set a 2008 benchmark for Chinese firms.

However Hou Wei, a senior analyst with Chinese Umetal.com website told Xinhua on Tuesday that the 65-percent iron ore price rise reached between  Japanese steel manufacturers Nippon Steel and JFE Steel, as well as ROK's POSCO, with Vale for iron ore imports is likely to set a benchmark price for 2008.

Hou said although the country's largest iron and steel maker Baosteel Group was still in negotiations with the world's major iron ore providers, Chinese major steelmakers were likely to follow suit according to previous international practice.

The world's largest iron ore provider had concluded iron ore price negotiations for 2008 with the largest German steelmaker ThyssenKrupp Steel, with two types of iron ore fines price up 65 and 66 percent respectively year on year, said Vale on its website.

Hou said the price rise was "within expectation".

Vale had also signed contracts with Japanese Nisshin Steel, Sumitomo Metals and Kobe Steel on similar terms.

"The magnitude of the price increase for 2008 reflects the continuity of very tight condition still prevailing in the global iron ore market," Vale said on Monday in a press release.

"Japanese steel companies rely heavily on imported iron ore due to huge domestic demands and it is reasonable that Japanese steel makers are eager to settle the price earlier," said Hou, adding that the global spot iron ore price has also soared in line with a demand surge.

Japan, the world's second largest iron and steel maker behind China, imports nearly all of its iron ore.