Iron ore prices

Chinese steel mills, led by industry leader Baoshan Iron & Steel Corp, have started formal talks with international iron ore providers on the 2007 prices of the major raw material to make steel.

Wang from the Ministry of Commerce said he expects international iron ore prices will remain at a "reasonable and stable level" next year.

"If prices fluctuate radically, it will harm both Chinese steel mills and international iron ore providers," he stressed.

"I hope they will find a mutually beneficial solution."

The world's three largest iron ore producers Companhia Vale do Rio Doce from Brazil, Australia's BHP Billiton and Anglo-Australian mining giant Rio Tinto reportedly want to elevate 2007 prices by 5 to 10 per cent after two consecutive surges over the past two years.

In the first half of this year, the three, controlling 70 per cent of global iron ore production, raised 2006 prices by 19 per cent. Last year, prices jumped by a staggering 71.5 per cent.

Wang said there has been a balance between iron ore demand and supply in the international iron ore market thanks to growing production of the material at home and abroad.

Iron ore production in China is predicted to surge by more than one-quarter to 644 million tons this year from 2005.

Meanwhile, the nation the world's biggest iron ore importer will purchase a total of 325 million tons of the material from other countries, up 18.2 per cent.

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