In almost every raw materials industry there is a tug of war between miners of the raw materials and manufacturers who refine their materials.
Today's struggle is between Chinese and Japanese steelmakers and iron ore miners. Steelmakers want a 40% cut in iron ore prices, while miners are holding out for a cut of 20% or less. China's leading steelmaker said that iron ore prices will fall by at least 40-50% in 2009.
China is threatening to cancel contracts with the three main iron ore companies, VALE (NYSE: RIO), Rio Tinto (NYSE: RTP) and BH Billiton (NYSE: BHP) if their demands for price cuts are not met.
Iron ore prices reached a high of $200 a ton in 2008 and then fell to $55 a ton. Prices have since rallied back to $72 a ton.
Do you think these price cuts will help our infrastructure projects?
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