Chinese steelmakers consented to a 96% price hike in steel ore from Anglo-Australian mining company Rio Tinto, reports the FT. The increase is indicative of a continued surge in demand for commodities in emerging markets. FT:
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 to in 2005, when the commodities boom gathered pace… Analysts said steelmakers are likely to pass the rise in costs on to customers, such as construction companies and car makers.
The price hike will likely mean more costly imports here in the U.S., helping to sustain the inflation that the Fed is so confident will soon ease.