TOKYO, Feb 18: Asia’s top steelmakers on Monday said they had agreed on a 65 per cent rise in iron ore prices with Brazil’s Vale to record levels, the sharpest gain in three years amid soaring demand for the resource.

The price of the commodity, a key material in steel manufacture, has been driven up by a construction boom in Asia’s fast-growing emerging economies, particularly China and India.

Setting the global benchmark, Japan’s largest steelmaker, Nippon Steel, and South Korea’s POSCO said they had jointly reached the accord with the Brazilian iron ore leader for the fiscal year starting April 1.

Nippon Steel and POSCO agreed to buy Itabira fine ore -- a standard type of powdered ore -- at a record $78.89 per ton from Vale, up 65 per cent from a year earlier.

“The steel market remains very tight as demand for steel products in the world, namely China, is still growing rapidly,” a Nippon Steel spokeswoman said.

The rise is much steeper than the current financial year’s 9.5 per cent year-on-year rise and the previous year’s 19 per cent hike, although it is still below a sharp 71.5 per cent spike in 2005.

Nippon Steel -- the world’s largest steelmaker after the Arcelor-Mittal giant created in 2006 said it was the sixth straight year that the cost had gone up.

In Seoul, POSCO spokeswoman Ko Min-Jin said Australian miners BHP Billiton and Rio Tinto were expected to follow with a similar agreement.

“We will consider raising prices of our products after completing negotiations with other miners,” she said.

Chinese state media and Japan’s second largest steelmaker JFE Steel also both confirmed the 65 per cent rise. Other major steelmakers including Arcelor Mittal were seen as likely to follow suit.

Japan, which is the world’s second largest economy but lacks natural resources, imports all of its iron ore, with 60 per cent coming from Brazil.

Domestic media estimated that the latest price hike would raise Japanese steelmakers’ purchasing costs by a combined 500 billion yen ($4.7bn) this year, with the burden to be passed on to automakers and other customers.

But Katsuaki Watanabe, president of Toyota Motor Corp., said Japan’s top-ranked automaker had no immediate plans to raise price tags on cars.

“Especially since last year, prices of all raw materials have been higher including crude oil, precious metals and resin material,” Watanabe told reporters in Tokyo.

“It would be difficult to let all the price hikes, including of steel, reflect in the final product prices. We believe it is important to keep product prices reasonable for consumers while all industries make efforts to maintain costs low,” he said.The China Securities Journal also confirmed a 65 per cent rise in iron ore costs and said that the country’s largest steel firm, Baosteel Group, was likely to conclude price talks in February.

Baosteel represented China in the talks with the world’s three largest miners -- Anglo-Australian groups BHP Billiton and Rio Tinto, and Vale -- to hammer out the annual contract prices for iron ore.—AFP