The World Famous "Fence Wizard": More pressure added to iron ore prices...

Thursday, February 21, 2008

More pressure added to iron ore prices...

The astounding 65% price hikes reported Tuesday here at the Fence Wizard Blog for new iron ore contracts may not be the last of the short term increase. This signals that 2008 will be the sixth straight year for record high iron ore prices. The key problem for any price relief is that just 3 companies control 75% of the worlds iron ore production and emerging markets continue to pressure supply even as U.S. demand slows. Two of those companies may combine as BHP Billiton has been attempting to takeover Rio Tinto for months.
Q> What does this hike mean for final products such as rolled steel or chain link for final buyers such as fence companies?
A> Most likely a 10% or so bump in finished product costs; some good news is that zinc is about 50% lower than the highs reached in Dec2006-Jan2007.

Rio Tinto, BHP want more than 65% increase for iron ore.
Rio Tinto (RTP) has indicated it is not satisfied with the 65% iron ore price increase negotiated by Vale (RIO) and Posco (PKX). If it doesn't back down, this may be the beginning of the end for iron ore's benchmark system, under which global iron ore prices follow prices set by Vale, Rio Tinto and BHP Billiton (BHP), who together produce almost 3/4 of the world's iron ore. Rio contends Asian steel mills are saving money due to its proximity to them, and wants a piece of their savings. There are rumors BHP will also hold out for more.
Rolled Steel Price Chart
Kitco Zinc Chart


The Toolguy said...

It seems like prices are going up all over the place! I can't believe it! I did see some good prices at

John - Boundary Fence Salesman said...

iron is old school, discounted vinyl fencing and aluminum fencing is the way to go now. Aluminum does not rust like iron and has a longer warranty!

Paramount Fence Company in Michigan said...

We dont install iron at all. Our fence company in Royal Oak Michigan prefers to install aluminum and steel. We resort to commercial grade steel if someone really wants the durability of iron.

ABC Fence in Saginaw Mi said...

Iron-Schmiron.... thats what we thing about that... buy aluminum fencing from ABC Fence Company in Saginaw, Mi.

Sarah Paul said...

Amazing how simple it can be to communicate with people and have them understand a certain topic,you made my day.

Iron Fences

Jason Knight said...

That is pretty cool, I have been thinking about building a vinyl fence. I think that it would work perfectly on my property, and it would help keep my puppies in my back yard.


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