OREANDA-NEWS. March 2, 2010. Chinese steel makers agreed long term contract prices in 2010 with the “big three” iron ore producers. As result of mutual compromises, the parties agreed that the iron ore prices would rise by 40% in 2010 y/y.

Millennium Capital: this news is of a mixed nature for Ukrainian companies. On the one hand, Ukrainian iron ore producers operating in the Chinese market will enjoy a 30% windfall increase in revenues. But on the other hand, the iron ore price increase on the Chinese market will provoke price hikes in the other markets. In this case, Ukrainian steelmakers will have to decrease reluctantly their profitability margins or to increase sale prices, which may be impossible in an environment of growing but still far from being strong demand. In any case, the vertically integrated companies will be in the best position, while the other producers will be reluctant to change their financial plans.