Resources giant BHP Billiton believes there is still price pressure on the upside for the ferrous mineral despite the fact that the 2005 contract-price settlement came in 71,5% higher year-on-year. Speaking in Johannesburg, CEO Chip Goodyear suggested that the negotiations were set to “be as exciting as any in the last 25 years”, particularly as China and Japan seek to assert their respective authority over the process.

“Iron-ore is showing strong demand, with China now being the largest iron-ore importer, having overtaken the Japanese,” Goodyear said, pointing out that last year the Chinese imported more than 200-million tons and by the middle of 2005 had breached the 150-million-ton level.

Spot prices for iron-ore in China have continued to rise and are currently about $65/t, as compared to $50/t contract prices. Goodyear stressed that the gap between the two selling prices would not close entirely, but said there was potential to close the margin.

“Next year will be as exciting as any for several years. Firstly, the Japanese are very protective of their position as the historic negotiator of prices; secondly, the Chinese feel that it is their turn to dominate given that they are the largest importer. Governments are also sensitized to this issue; the media interest is high . . . and, finally, the producers are growing their production rapidly and they want to find a home for their product.