According to calculations based on The Steel Index pricing, Rio Tinto Group and BHP Billiton Ltd the world’s second and third largest iron ore exporters, may raise contract prices about 23% in the second quarter from the first as spot prices hit a record.

According to The Steel Index, the price of 62% iron ore arriving at Tianjin port averaged USD 178.03 a tonne including shipping, from December 1 to February 24, compared with USD 149.91 in the previous three months.

The price rose to USD 191.9 a tonne on February 16, the highest level since the data became available in November 2008. Average shipping costs fell to USD 7.3 a tonne in the December-February period from USD 11.26 in previous three months.

Mr Henry Liu a Hong Kong based analyst with Mirae Asset Securities Co said that “With the quarterly price hike, Chinese steelmakers are still making profits under the current steel prices. But steel prices may incur a substantial correction in April due to increasing credit curbs and an industry overcapacity.”

(Sourced from Bloomberg)