Leading global financial services firm JP Morgan Chase & Co, after increasing its earlier 10% estimate, said that iron ore contract prices may gain 25% in 2008 as miners fail to match the increase in demand. It added that prices would probably rise by 10% in 2009.

JP Morgan‘s Sao Paulo unit in a report said that “This imbalance puts miners in a strong bargaining position at the annual price negotiations beginning October 2007.''

It is noted that spot prices of iron ore have almost doubled this year as Chinese steel production increased and shipping rates rose as contract prices gained 9.5% in 2007 following a 19% increase in 2006 and a 71.5% jump in 2005.

Merrill Lynch & Co expects contract prices to increase by 30% in 2008 after revising an earlier estimate for an 8% rise.