By Jin Jing and Chen Jialu (China Daily)
Updated: 2008-02-22 08:59

Workers prepare to transport steel bars at a steel market in Hefei, east China's Anhui province, September 17, 2007. [Agencies]

The 65 percent raw material price increase will add 500 to 550 yuan cost for Baosteel, and 600 to 650 yuan to Wuhan Steel, said Zhou.

The expected 65 percent ore price rise will translate into a rise of more than 20 percent in steel production costs, Zou Jian, chairman of Metallurgical Mines Association of China, told China Daily.

Rio Tinto group, the world's second largest iron ore producer, has said it intends to hold out for a higher price than the 65 percent rise agreed between Vale of Brazil and Japanese and South Korean steelmakers because it believes it deserves a premium on its iron ore as its mines, which are in Australia, are closer to Asia than Vale's.

Tony Loo, managing director of Rio Tinto China, earlier said the ore supplier would seek a freight premium on the iron ore it ships to Asian steelmakers.

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