Worldwide demand for steel is driving iron ore and steel prices to new heights.
China’s economic expansion, which has helped drive oil upward, has also put strains on worldwide supplies of iron ore and steel sending prices through the roof. According to the BBC, for example, the cost of steel jumped 8 percent in January 2005 alone and in China the price of steel jumped 24 percent in the same month.
The demand for steel has led iron ore producers to boost their prices. In February, for example, mining companies Rio Tinot and Cia. Vale Do Rio Dolce reached an agreement with Japanese steelmaker Nippon that raised the price Nippon paid for iron ore by 72 percent. Other iron ore producers are expected to seek similar increases.
Steelmakers, meanwhile, have to pass on those costs to someone and the result is companies looking to boost steel prices 20 to 30 percent, which in turn would cause a ripple effect of price increases in goods that use steel (and/or encourage exploration and use of steel alternatives).
Sources:
Ore costs hit global steel firms. The BBC, February 23, 2005.
European can makers fear knock-on effect of steel prices. FoodProductionDaily.Com, October 14, 2004.
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