Commodity Blog

Fortescue Metals Group Ltd., building a A$2.7 billion ($2.4 billion) iron-ore project in Australia, said prices of the steelmaking material may rise as much as 50 percent from April because of higher demand.
“China and India are booming and demand from other countries in Asia is growing,” Russell Scrimshaw, executive director, said in an interview in Mumbai yesterday. “There is strong upward pressure.”
Rising demand from China, the world’s largest steel user and Fortescue’s largest customer, pushed iron-ore prices higher for the past five years. Citigroup Inc. said Feb. 6 that contract prices may rise 60 percent from April.
Fortescue, which plans to ship its first ore to China in May, has secured long-term sales agreements with 35 Chinese steelmakers to sell 55 million metric tons of iron ore annually for a minimum of 10 years, Scrimshaw said.
Cia. Vale do Rio Doce, Rio Tinto Group and BHP Billiton Ltd., which account for three quarters of global iron-ore trade, in November began talks to set benchmark contract prices for 2008 with global steelmakers.