Skyrocketing Iron Ore Prices Squeeze Steelmakers' Profits

Steelmakers’ profits are shrinking as iron ore suppliers saddle them with steep cost increases while the market for finished materials remains resistant to price hikes. Even though the world's biggest iron-ore miners are digging up record amounts of the black rock, demand is outstripping supplies. That’s allowing them to boost prices, continuing the upward momentum that got underway in the second half of 2010. Steelmakers, the major buyers of seaborne iron ore, are unable to pass all the increases along to end users, and are warning that raw material prices are likely to depress their earnings for most of the 2011 fiscal year.