Iron Ore Prices Soar, Steelmakers Decline

123jump.com Staff
24 Jun, 2008
New York City

Rio Tinto and steelmakers in Japan and China agreed on iron ore price increase of as much as 100%. The iron ore, which is not actively traded on any exchange and prices are reviewed on annual basis by customers with miners. Rio Tinto hopes to sell between 320 and 420 million tons at a revised price from the current production of 200 million tons. Nippon Steel, Kobe Steel and JFE Holdings fell between 2% and 3%.

[R]5:00AM New York, 7:00PM Tokyo - Japanese steelmakers accept iron ore price increases.[/R]

Stocks in Japan fell on news that steelmakers have agreed to accept Rio Tinto’s demands to double prices of Australian iron ore in fiscal 2008. Iron ore prices have jumped nearly 400% in the last five years.

However commodity stocks rose as oil prices advanced on news that there will be continued supply constraints on production disruptions in Nigeria.

Market sentiment

In Tokyo trading Nikkei 225 fell 0.06% or 7.91 at 13,849.56, and the broader Topix Index gained 0.1% or 1.19 at 1,349.12.

In the first section of the Tokyo Stock Exchange 7.9 billion shares worth 826 billion yen were traded and in the second section 178 million shares valued at 3 billion yen changed hands.

Of the Nikkei 225 stocks 115 rose, 104 declined, and 6 were unchanged. Furukawa led advancers in the index shares with a rise of 8.94% followed by Chiyoda Corp. gaining 4.13%.

Nippon Steel accepts iron ore price increases

The Nikkei News reported today that Nippon Steel Corp. and other major Japanese steelmakers have agreed to accept Rio Tinto''s demands to double prices of Australian iron ore in fiscal 2008. China based Baosteel also accepted similar prices increases for Australian supply of iron ore.

Rio Tinto iron ore subsidiary Hamersley Iron yesterday reached an agreement with China’s Baosteel on the price for Hamersley iron ore deliveries for the contract year commencing 1 April 2008.

The new prices for Pilbara Blend Fines/ Yandicoogina Fines will be US$144.66 per dry metric ton unit, while Pilbara Blend Lump will cost US$ 201.69 per dry metric ton unit.

Sam Walsh, chief executive of Rio Tinto''s Iron Ore Group said, “The agreement builds on the valuation premium for Rio Tinto''s Pilbara iron ore businesses, the importance of which is highlighted as we move towards our 320 and 420 million tons per annum goals from our expected capacity of about 200 million tons in 2008.""

FDA extend review period of prasugrel

Daiichi Sankyo reported on its Website today that the U.S. Food and Drug Administration extended the review period for the prasugrel new drug application based on supplementary information provided during the review period.

The prasugrel NDA was granted priority review by the FDA in February 2008 and the new FDA action date for prasugrel is September 26, 2008.

Gainers & Losers

Furukawa led advancers in the Nikkei 225 index shares with a rise of 8.94% followed by rises in Chiyoda Corp. of 4.13%, in Nippon Suisan of 4.12%, in Alps Electric Co. Ltd. of 3.83%, and Kumagai Gumi Co. of 3.64%.

Other commodity stocks rose after crude oil prices gained above $137.00 a barrel on speculation that supply disruptions in Nigeria will offset the decision to increase output by Saudi Arabia. Mitsubishi Corp increased 2.05%.

Chugai Pharmaceutical Co led decliners in the Nikkei 225 index shares with a fall of 3.8% followed by losses in Nippon Sheet Glass of 3.6%, in Tokyo Electron of 3.21%, in Mitsui Chemicals of 3.17%, and Pioneer Corp of 3.05%.

Chugai Pharmaceutical declined after Credit Suisse downgraded the stock to “underperform” from “neutral”.

Steelmakers dropped on news that companies have accepted the new price increase proposed by Rio Tinto for Australian iron ore. Nippon Steel slipped 2.50%, Kobe Steel edged down 2.30% and JFE Holdings shed 2.18%.

Exporters also slumped as the yen rose 0.48% to 108.06 against the yen. Toshiba plummeted 2.52% and Casio Computer climbed down 2.02%.

Daiwa Securities to shore up stake on Vietnam

Daiwa Securities said in a statement to the Tokyo Stock Exchange that it will increase its stake in Vietnam based Saigon Securities Inc. from 1.25% to 10%.

Daiwa is strengthening its footing in emerging economies and also plan to increase revenue from outside Asia to 100 billion yen.

Asian Markets Review

In Tokyo Nikkei 225 Index closed lower 7.91 or 0.06% to 13,849.56, in Hong Kong Hang Seng index decreased 258.94 or 1.14% closed to 22,456.02. In Australia ASX 200 index higher 6.30 or 0.12% to close 5,290.00. In Malaysia KL Composite index increased 4.87 or 0.41% closed to 1,200.28.

In South Korea Kospi Index decreased 4.75 or 0.28% to close at 1,710.84, in Thailand SET index closed lower 5.15 or 0.67% to 763.75 and Indonesia JSE Index edged increased 2.63 or 0.11% to 2,365.38. Sensex index in India decreased 186.74 or 1.31% to 14,106.58.