BHP, China's Baosteel agree on up to 96.5% iron ore price hike

BHP Billiton said on Friday that China's Baosteel, negotiating on behalf of the Chinese steel industry, agreed to price hikes of up to 96.5 per cent for iron ore supplies this year .

The increase is in line with an agreement Baosteel made last month with Rio Tinto, and comes as surging global demand for steel has squeezed iron ore supplies and sharply boosted prices.

Priceswillrise79.88percent for iron ore fines and 96.5 per cent for iron ore lump and are retroactive to April 1, BHP Billiton said.

"We are happy to have been able to settle the prices announced with one of our most important customers and we've been particularly pleased with the spirit in which both Baosteel and BHP Billiton undertook negotiations," said Marcus Randolph, BHP Billiton chief executive for ferrous and coal."At the end of what has been a long process, we believe our relationship with our customers remains as positive and strong as ever."

Chinese steel mills have banded together to negotiate with iron ore suppliers in recent years in hopes of getting a better deal. But they still have been forced to accept big annual price increases in each of the past six years.

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