Posco expects steel prices to climb - Metals News - Metals Place

Posco expects steel prices to climb - Metals News - Metals Place

22 February 2008

Posco expects steel prices to climb

Korean steelmaker Posco said yesterday it was inclined to raise steel prices after a surge of 65 percent in raw material iron ore prices.

Posco earlier this week agreed to the hike in iron ore prices with Brazilian mining company Vale. Iron ore is the main ingredient for making steel.

"With raw material prices soaring, wouldn't it be necessary for us to raise steel prices?" said Lee Ku-taek following the company's annual shareholders meeting.

"We will have to consult with our clients on how much we will raise the prices," he added.

The CEO said Posco was in the middle of negotiations for coal deals after difficult iron ore talks, but could not make any predictions on prices at the moment.

Markets expect buyers to pay higher prices for coal negotiations as coal prices have surged this year due to high domestic demand from China and supply delays from Australia due to port conditions.

Lee also said Posco will have to put back its expected April start date for work on a 12 million-ton-capacity steel plant in eastern India. The plant would be India's single largest inward foreign investment project.

Japanese and Korean steel mills this week agreed to $78.90 a ton for fine ore in the year starting April 1. But the market expected Australian miners to hold out for more.

The market anticipates that BHP Billiton and Rio Tinto will demand prices that would better reflect the lower cost of shipping iron ore from Australia and sizzling spot prices.

The term price of iron ore has risen fivefold since 2001.

Japan's Nippon Steel, JFE Steel, a unit of JFE Holdings Incorporated, Kobe Steel, Sumitomo and Nisshin, and Korea's Posco had all agreed to the increase.

Term ore prices had been widely expected to rise by at least 50 percent after spot prices soared to record highs in 2007 and Chinese demand showed no signs of abating. – JoongAng Daily