Iron ore is the key raw material for making steel and to the dismay of the entire world the Iron ore prices are zooming once again. While the top three steel makers in the world control only 30% of the global production, the top three Iron ore producers of the world control over 80% of the global supplies.
That is precisely the reason why they are able to dictate the prices every year with the steel producers.
The global Iron ore prices have hit a record high last week on the back of massive increase in the imports by China, which is the largest steel producer in the world today.
Coupled with that the slow recovery in steel production by Japan and US are also helping to push up Iron ore prices. All these does not work well for the steel producers of the world, and in fact the profitability of steel makers could crash in the coming months.
That is also the reason for the global steel majors to always scout for buying out Iron ore mines in various countries like Australia, Brazil and Indonesia. Now the Iron ore producers are talking about quarterly contracts to fully get the price increase benefit. The consuming industries are unable to skip that only because they are helpless.