Rio Tinto Price Cut Lifts Mining Stocks
Word that the Aussie mining giant Rio Tinto (RTP) agreed to cut iron-ore prices by a third in a deal with Nippon Steel, the big Japanese producer, helped push shares in mining stocks higher Tuesday morning, as industry observers had been looking for an even sharper reduction in prices.
Viewed as the benchmark for global ore pricing, the new contract likely will lead other ore producers and steelmakers to follow suit. The contract between Rio and Nippon, the result of months of negotiations, is part of the process by which the world's three big iron-ore miners -- Rio, BHP Billiton (BHP) and Brazil's Vale (VALE) -- and the steel industry in Japan, Korea, Taiwan and China set their prices year-by-year.
Still, there was resistance in China to the fresh Rio-Nippon contract. According to a Dow Jones Newswires report, industry officials in China said they remain steadfast in their demand for a 40% reduction in iron ore prices for 2010. The officials also said that the 33% cut left prices higher than current spot prices for iron ore in China.
Rio agreed to sell lesser-quality fine ores at 97 cents for each dry metric ton unit, down from almost $1.45 last year. Prices for higher quality ores, according to the contract, were cut by nearly 45% to $1.12 a ton.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV