The announcement by the iron ore industry to massively increase iron ore prices by 80 to 90% compared to today’s price levels for fines and even more for lump and pellets has outraged the European steel industry. These increases come while the industry is still reeling from the effects of the most serious financial and economic crisis since the 1930s. The European steel industry feels that the European governments should be aware of the implications for the wider economy if these price increases become reality. It is striking that these price hikes are coming from companies which, even in the worst crisis in the world economy in the last 80 years show EBIT margins of up to 50% per tonne. The steel industry is increasingly concerned at the degree of concentration in the iron ore industry. It is striking in this respect that there is little variation in the level of price increases being talked about by the large producers which dominate the iron ore industry. The European steel industry has already indicated to the European competition authorities its concerns at the excessive pricing power now held by iron ore producers. This also reinforces EUROFER’s concerns about the impact of the proposed joint venture of the Australian iron ore assets of BHP Billiton and Rio Tinto which would lead to an even further concentration on the market.
