The World Steel Association shared that the steelmakers, who pay 90% more for iron ore have to elevate prices to pass on the higher raw material costs. The iron ore exporters will abandon a 40- year custom of setting annual prices in favor of quarterly contracts. Chairman Paolo Rocca, in an interview in Beijing revealed that it is a very negative trend. He also added that the change and the higher costs that entailed “will affect our customers”.

The authorities were called on last month by the association to inspect the iron ore market after Brazil’s Vale SA won a 90% price rise from Japanese mills for quarterly contracts which commenced from April 1. The May prices for the products have been raised by as much as 25% because of swelling costs, by the Asia’s third-biggest steelmaker.

Rocca said, “I think we have no alternative but to transfer the increase in costs to the market. Quarterly ore pricing will put our industry less competitive against the aluminum and raw material industries. This will affect our industry”.

Credit Suisse Group estimated that Vale, BHP Billiton Ltd. and Rio Tinto Group account for about two thirds of the globally traded iron ore market, worth $200 billion annually. The Chinese Government is investigating the possibility that the three companies may be dominating supplies of the steelmaking ingredient.