Vale SA (NYSE:VALE) (SAO:VALE5), BHP Billiton (ASX:BHP)(NYSE:BHP) and Rio Tinto (ASX:RIO) (NYSE:RTP) have reportedly threatened China that they will cut off iron ore supplies if the steelmakers in the country don't accept the price demands they're offering, according to the China Iron & Steel Association.
The major three iron ore producers in the world have sought price increases from between 90 percent to 100 percent, as demand for iron ore grows around the world, with China being the largest consumer of iron ore.
All of this started when the mining companies broke with the past practice of selling iron ore on annual contracts and negotiated a 90 percent increase in price with mills in Japan.
In a counter move, China has said they have begun an investigation to see if the three large iron ore producers are monopolizing supplies.
Apparently China has about two months of iron ore stockpiled as of the latter part of March, which means the pressure ramping up with only about a month left at this time.
Demand for steel is estimated to grow by over 10 percent in 2010, which has resulted in a growing demand for iron ore in competing countries and businesses.
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