CVRD, ThyssenKrupp reach price accord

Rio de Janeiro-based mining giant CVRD (NYSE: RIO) and German steelmaker ThyssenKrupp have finalized an agreement on iron ore prices for 2005, CVRD said in a statement. ThyssenKrupp agreed to a price increase of 79% for granulated iron ore from the Carajás region. The agreement covers 2Mt of lump ore (also called granulated ore) in 2005. ThyssenKrupp annually buys some 14Mt of pellets, fines and lump ore from CVRD, the world's largest iron ore producer. Negotiations are continuing on price increases for pellets and fines, a CVRD spokeswoman told BNamericas. An announcement on price increases for pellets and fines will be made when a deal is finalized, she said. CVRD said it has now set prices for lump ore, iron ore fines and iron ore pellets, the company's three main products. In March, ThyssenKrupp announced a price increase of 15-30 euros/t (US$20-40/t), effective April 1, to offset rising iron ore prices. Other European steelmakers such as Arcelor also announced a rise in steel prices after agreeing to a 71.5% hike in iron ore prices. However, slack demand in the European market was behind Arcelor's recent decision to cut production. Arcelor is the world's second-largest steelmaker. CVRD said it has budgeted US$1.7bn in 2005 for expansion projects to boost production. The company has seven separate expansion projects underway, with additional capacity expected in 2005 through 2007.