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Eurofer appeals to EU to act to prevent excessive iron ore pricing

The European steel body has urged EU regulators to prevent what they call unfair competition warning that the increase in prices could hamper economic recovery in Europe

BRUSSELS, March 31 (Reuters) - -

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European steel industry body Eurofer urged European Union regulators on Wednesday to prevent unfair competition and excessive pricing of iron ore, saying it could hamper economic recovery in Europe.

Eurofer said market concentration by three companies controlling almost three quarters of the world market had resulted in unbalanced pricing power and a high degree of market concentration in the seaborne iron ore market.

It issued its appeal to the EU one day after top global iron ore producer Vale (VALE5.SA: Quote)(VALE.N: Quote) and BHP Billiton (BHP.AX:Quote)(BLT.L: Quote), the world's No. 3 producer, said they would price iron ore to Japanese steelmakers quarterly from April 1, signalling the demise of annual fixed-price deals.

"Iron ore is the basis for the EU's most important value chain," Eurofer said in a joint statement with Orgalime, the European Engineering Industries Association.

"If economic access to it is hampered through unjustifiable pricing and consequently steel production in Europe is jeopardised, this will have severe consequences for the whole value chain and millions of jobs in the sectors concerned."

It said a proposal by BHP and Rio Tinto (RIO.AX: Quote)(RIO.L: Quote) to merge their Australian iron ore assets into a joint venture would intensify concentration in the sector, with iron ore supply being dominated by only two companies.

"Eurofer and Orgalime urge ... an immediate intervention by European governments and authorities to tackle competition distortions in raw material markets and to prevent speculation on raw materials in order to support the long-term future of the industrial value chain in Europe," the statement said.

It also urged "the European Commission and German federal cartel office as competent competition regulators to continue examining thoroughly the proposal by BHP Billiton and Rio Tinto to create a joint venture." (Reporting by Bate Felix, editing by Timothy Heritage and Dale Hudson)

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