THE annual round of price negotiations between the world's leading iron-ore producers—Vale of Brazil and Rio Tinto and BHP Billiton, both Anglo-Australian firms—is drawing towards resolution. With demand, particularly from China, outstripping supply, Vale has forced prices higher by some 65% compared with last year in deals with steelmakers from Japan, South Korea and Europe. This will set a benchmark both for Vale's deals with other countries' steelmakers and for prices of iron ore supplied by Rio and BHP. These firms have yet to strike deals of their own. Inevitably, steelmakers will pass on these price rises to customers.

AFP