Nomura Holdings Inc said that the iron ore contract price is set to increase by 40% to 50% in 2010 after a surge in the cost of the steelmaking ingredient for immediate delivery on the so called spot market.

Mr Paul Cliff analyst at Nomura wrote in a note that "Contracts are unlikely to be settled at very large discounts to the spot price, otherwise ore would simply be sold into the spot market."

Nomura Holdings said that trade in the spot market has grown to 400 million tonnes a year from 100 million tonnes in 2003.

It may be noted that JPMorgan Cazenove raised its forecast for the iron ore contract price last week, saying it will rise 40% as compared with a previous estimate of a 20% gain.

(Sourced from www.bloomberg.net)