In a move likely to increase the cost of cars and machinery, and deepen global inflation fears, Chinese steelmakers agreed to a huge increase in annual iron ore prices. From the Financial Times:
Chinese millers agreed to pay Anglo-Australian miner Rio Tinto up to 96.5 per cent more for their ore supplies this year, the largest ever annual increase and well above the 9.5 per cent increase paid last year.
The rise suggests that demand for commodities from emerging economies remains strong, in spite of the US slowdown, fuelling fears that global inflation will continue to rise. The rise – an average 85 per cent – surpasses the record increase of 71.5 per cent agreed in 2005, when the commodities boom gathered pace.
“Commodity-led inflation risks appear to be growing,” said Tobias Levkovich, Citi chief strategist.