EU Steel’s Board member, Pedro Lisboa, has welcomed Eurofer’s call for a mining cartel price inquiry by the European Competition Commission.
He said a price-fixing cartel risked increasing economic instability and imposed immediate burdens on global steel fabricators.
“Steel accounts for 95 per cent of the world's metal consumption,” said Lisboa. “This historic price shift will immediately profit iron ore miners, but it will stretch the budgets of global consumers and may lead to inflationary pressures, which in turn will either dampen consumer demand, or force central banks in increase lending rates.”
Europe’s steel industry group, Eurofer has asked the EU Competition Commissioner to launch an inquiry into cartel behavior by the world’s top mining companies. Eurofer, which includes Corus, Arcelor, Mittal and ThyssenKrupp, said it provided the Commission with sufficient evidence to launch inquiries into anti-competitive and abusive behavior by iron ore miners.
The challenge comes came after BHP Billiton and Brazil’s Vale, two of the leading three iron miners, agreed new contracts with customers, moving from annual to quarterly contracts reflecting a 90 per cent price rise. Eurofer alleges that the iron miners may be colluding with prices.
The anti-competitive action comes a day after global steel prices were predicted to rise by up to a third. The Financial Times reported that this end of the 40-year-old benchmark system is likely to increase the cost of everyday goods including cars and domestic appliances.
Lisboa added: “The short to medium-term impact on goods manufacturers is potentially serious. Steel fabricators must now prepare stock holdings for an imminent surge in purchasing, designed in part to insulate manufacturers against a prolonged period of uncertainty.”
“The long-term price implications are not yet clear. Although this shift to quarterly contracts linked to the spot market represents a normalization of the iron commodity market, the water is muddied by the risk of an emboldened cartel which will now accelerate a strategy of vertical integration.”
According to the Financial Times, the new price system will lift the cost of iron ore to Asian steelmakers to about $110-$120 a tonne during the April-June period, up between 80 and 100 per cent from the $60-a-tonne level at which the 2009-10 annual contracts were settled.
For more information:www.eu-steel.com
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