Chinese importers yesterday agreed to a 19 per cent rise in the price of iron ore, the second biggest increase in 25 years.

Shanghai Baosteel Group, representing Chinese iron ore importers in talks with major international suppliers, accepted the price rise from BHP Billiton, the world's largest resources company.

BHP Billiton issued a statement confirming it reached agreement with Chinese customers on prices for contracted iron ore tonnage for the 2006 contract year.

"Prices increased by 19 per cent over prices negotiated in respect of the 2005 year across the range of lump and fines iron ore products supplied by BHP Billiton," it said.

The price rise had been agreed a couple of weeks ago by some European, Japanese and other Asian steel producers.

It means Chinese iron ore importers will have to pay about 10 billion yuan (US$1.25 billion) more each year.

Chinese steelmakers will sign contracts with Brazil's Cia Vale do Rio Doce (CVRD), and the London-based Rio Tinto Group, the world's other two major iron ore producers, in one or two days, said an unnamed source close to the situation.

CVRD, BHP Billiton and Rio account for 75 per cent of global seaborne iron ore trade.
The Chinese firms' talks with suppliers had been prolonged for weeks compared with other iron ore buyers.

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