Inflation : you think it’s over ? Think twice

A news that could seem secondary… but…

Baosteel, China’s largest steelmaker, said Tuesday it had agreed to nearly double what it pays Anglo-Australian mining group Rio Tinto for iron ore.

Baosteel, acting on behalf of China’s steel industry, negotiated to pay between 80 and 97 percent more than last year depending on the category of iron ore, which is used to make steel.

(…the largest ever annual increase and well above the 9.5 per cent increase paid last year. FT)

Baosteel traditionally sets the price for the nation’s other steel producers for internationally purchased iron ore.

Prices of iron ore have soared in recent years due to growing demand led by a construction boom in fast-growing China and India.

The latest increase also reflects rising transportation costs that have increased due to record oil prices.

China imported 383.09 million tonnes of iron ore in 2007, up 17.4 percent from the previous year, according to government figures. (AFP)

Iron ore… basic and essential raw material to make steel for construction, cars, machinery… almost doubled price… for a country so large and with a red hot growth like China… ?

Now ask yourself : this fact points to which direction as far as global inflation is concerned ?

Upward ? Or downward ?

The inflation tsunami will continue.

[you might want to have a look at the cement production chart… with China… there]

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