Price Hike Pressure on Iron Ore with Tight Supply

World iron ore market gets tighter when the supply manages to catch up growing Chinese and world demand. The miners try to increase the annual contract price when the spot market price surged and is US$ 100 per tonne higher than contract price. Strong demand and stronger miners’ position could lift the price level. Chinese iron ore import volume could increase by more than 40 million tonnes in 2008 compared with estimated over 380 million tonnes in 2007 when International Iron and Steel Institute forecasts the steel demand increases by 11%. The world iron ore demand could increase more than 80 million tonnes in line with the steel demand growth. The largest iron ore supplier, Vale will increase the iron ore output by 25 million tonnes in 2008 from 2007. The supply could increase worldwide when Rio Tinto launches Hope Downs mine and Fortescue Metals Group starts the operation in Western Australia. However, India is expected to reduce the export when the domestic demand increases. Rio Tinto announced the firm sells 15 million tonnes of iron ore for spot market in 2008. The firm already sold a million tonnes order at US$ 190 per tonne including freight. The firm tries to take chance in the higher priced market.