SHANGHAI, Jan. 12 (SMM) -- On Monday, Laiwu Iron and Steel raised procurement price for iron ore concentrate by RMB 50/mt to RMB 1,220/mt (Fe 65%, dry basis).

The price hike is a response to market trend, as both mine operators and traders have strong intention to increase iron ore prices. Although iron ore prices failed to be raised in mid-November 2011, the trend for iron ore price increase is inevitable. As some small and medium sized mine operators and independent beneficiation plants significantly hiked iron ore prices, iron ore market prices were higher than iron ore procurement prices from steel mills. It was reported that long-term contract iron ore prices singed between large mine operators and steel mills were RMB 50-70/mt lower than market price. In this context, many large mine operators were reluctant to move iron ore any more.

Shandong iron ore concentrate market is relatively strong recently. Prices of iron ore concentrate have hovered at high level, and supply of iron ore concentrate is tight in Shandong province. By the year end, operating rates at beneficiation plants slipped steadily, so supply of iron ore concentrate tightened rapidly. If steel mills still purchase iron ore at previous low prices, iron ore suppliers will not willing to offer them goods. In this context, Laiwu Iron and Steel raised iron ore procurement price, which is in line with market trend.