ArcelorMittal (NYSE:MT) Head: Inflation Fears Rising

Head of ArcelorMittal (NYSE:MT), Lakshmi Niwas Mittal, said the huge increase in iron ore prices in the steel industry could result in higher output prices, where it could push up inflation substantially.

This would hit India hard, where the inflation outlook could reach much higher than 2009-2010 for the wholesale price index. The costs would be incurred from across the globe, implying inflation will be significant on that front as well.

Increasing costs in many commodities will also push prices up, especially in the manufacturing sector, where inputs would be much higher.

Almost across the board, with the exception of cement, industrial commodities have surged upward in price, which also effect the eventual outputs.

In India inflation in manufactured goods could reach as high as 6.8 percent in 2010-11, in contrast to 3.2 percent the year before; more than doubling in that short period of time.

There seems nothing to show that this will be different in any other region of the world.

India Likes Vale (NYSE:VALE), BHP Billiton (ASE:BHP) and Rio Tinto (ASE:RIO) Quarterly Contracts

India Companies Support Iron Ore Quarterly Contracts

Indian companies such as Sesa Goa and NMDC like what they see with the change in iron ore contracts with Vale (NYSE:VALE), BHP Billiton (ASE:BHP) and Rio Tinto (ASE:RIO), from an annual to a quarterly basis, and so do investors, as shares in the companies rose with the news this is going to be the new way of doing business with iron ore contracts and pricing, reflecting a more accurate measure of the market than the annual pricing couldn't do.

Exporters like this because it decreases the difference in price between spot and contract prices, and allows them to participate in profits depending on the movement of prices.

Annual contracts interfered with that and forced companies to operate within the parameters of the agreed upon price, no matter how it impacted their margins and earnings.