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Auto industry concerned by price hike in iron ore

Subscribe to Manufacturing-JournalThe European automobile industry is veryconcerned by the sudden and massive increase in the price of iron ore, acrucial material for producing steel.

The leading iron ore exporters announced, yesterday, steps to raise their prices by more than 80%. Such
excessive and unpredictable pricing policy would affect the
competitiveness of manufacturing in Europe, including the automotive

The automobile industry needs broad access to raw materials at
competitive conditions, especially in times of fragile economic
circumstances. With roughly one tonne of steel per car, the automotive
sector is a major client of the steel industry and - hence, iron ore
exports. Cost pressure in the sector is already high due to large
investments in environmental and safety technologies, while economic
recovery and consumer demand are still slow.

The main iron ore exporters are Australia's Rio Tinto, Brazil's CVRD and
Australia BHP Billiton (often called the 'big three'). Major producers
like India and Russia hardly export their iron ore. The 'big three'
represent around 70% of the exports of iron ore and, subsequently, hold
the significant pricing power of an oligopoly. In addition, BHP and Rio
Tinto have announced their intention to create a joint venture and merge
their Australian iron ore productions, leading to further concentration.

ACEA, the automobile industry's trade association, asks the European
Commission and Member States to urgently use all appropriate channels to
tackle distortive developments. ACEA also encourages the EU to rapidly
develop and implement a raw materials strategy to ensure a level playing
field on the world's raw material markets and facilitate broad access to
raw materials from third countries at competitive conditions.

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