Iron ore prices weigh on steelmakers

BEIJING, Feb. 28 (UPI) -- Iron ore prices are expected to rise sharply in the second quarter of 2011 as demand for steel in China rises, a commodities analyst said.
Colin Hamilton, a commodities analyst at Macquarie, said this year promises to be "phenomenal for the miners," The Financial Times reported Monday.
With contract prices set on the last day of the month, Guilherme Cavalcanti, the chief financial officer of mining conglomerate Vale, said, "This is the greatest moment for the company so far but the best is yet to come."
"Expected price increases are anticipated to range between 10 percent up to 60 percent, in some cases, as new contracts for iron ore delivery are negotiated," Mine-Engineer.com reported on its Web site.
Contract prices for iron ore, based on average spot market prices from December to February, are expected to reach $170 per metric ton for Australian iron ore, about 40 percent higher than the same quarter of 2010, the Times reported.
In January, China imported a record 69 million metric tons of iron ore.
Adding to a potential escalation of steel prices, coking coal prices are expected to rise due to floods in Australia, which limited coking coal extraction.