OAO Metalloinvest, Russia’s largest iron ore producer, agreed to supply 21.6 million metric tons of pellets to OAO Novolipetsk Steel, or NLMK, over four years.
“Prices will be determined using a formula reflecting pricing dynamics in the international iron ore market,” Novolipetsk said today in a statement. The agreement will ensure “stable pellet supply to NLMK’s expanding production facilities in Lipetsk,” it said.
Novolipetsk, Russia’s third-largest steelmaker, has a 27- square-kilometer (10-square-mile) production facility in Lipetsk, about 500 kilometers south of Moscow. Its output includes slabs, hot- and cold-rolled steel and galvanized products.
“It’s a very good contract for NLMK,” said Dmitry Smolin, an analyst at Uralsib Capital in Moscow who values the contract at $3.2 billion. “This year we expect the average price of pellets to be $145 a ton, 38 percent higher than in 2010.”
To contact the reporter on this story: Yuliya Fedorinova in Moscow atyfedorinova@bloomberg.net
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