June 17 (Bloomberg) -- Baosteel Group Corp., China’s second-biggest steelmaker, agreed to accept a 23 percent increase in iron ore prices from Rio Tinto Group and BHP Billiton Ltd., said research company UC361.com.
The steelmaker will pay about $147 a metric ton, excluding freight charges, for July quarter contracts, Hu Kai, an analyst at UC361.com., said by phone from Shanghai today. The increase followed agreements by Japanese mills, he said.
Steelmakers in China, the biggest buyer of iron ore, have resisted efforts by miners to raise contract prices after steel prices dropped and the European debt crisis roiled markets, the China Iron & Steel Association said on June 10. Brazil’s Vale SA, the biggest supplier of iron ore, won a 90 percent price increase for April quarter contracts.
Chen Ying, vice president of Baoshan Iron & Steel Co., the listed unit of Baosteel, couldn’t immediately be reached on her mobile phone. Rio and BHP are the world’s second and third- largest exporters of iron ore, and ship the steelmaking ingredient from their mines in Australia.
Vale this month said some Chinese steelmakers may default on contracts and seek to buy iron ore on the spot market as prices fell. Spot prices for iron ore arriving at Chinese ports have dropped 23 percent to $143.10 a ton yesterday from $186.50 on April 21, according to The Steel Index.
"Baosteel would not default on quarterly contracts," Hu said.
BHP spokeswoman Fiona Martin and Rio spokesman Gervase Greene declined to comment.