May 16 (Bloomberg) -- Baosteel Group Corp. and rival Chinese steelmakers, the world's largest iron ore buyers, may have to pay more for the steelmaking ingredient after Germany's biggest mill accepted a 19 percent increase.

ThyssenKrupp AG's agreement yesterday with Brazil's Cia. Vale do Rio Doce, the world's largest iron ore exporter, traditionally would set a global price benchmark as the first settled. Baosteel is still in talks and hasn't settled prices, chief negotiator Liu Yongshun said by phone from Shanghai today.

Chinese steelmakers have prolonged talks this year with suppliers such as Rio Tinto Group and BHP Billiton, refusing to accept a fourth straight gain in prices after 2005's record 71.5 percent gain increased costs and cut their profits.

Chinese steelmakers don't want to pay more for supplies, Baosteel Chairwoman Xie Qihua said April 17. Still, they may accept as much as a 10 percent increase, two Chinese steel industry officials said March 28.

``This doesn't help the Chinese cause when you see other people settling higher, but I still think they are just such a massive buyer that they'll try and pressure BHP and Rio to keep those rises to around 10-to-15 percent,'' said Michael Birch, who helps manage the equivalent of $102 million at Wallace Funds Management.

Shares of Posco, South Korea's largest steelmaker, fell 7.1 percent, the largest one-day decline in four-and-a-half years, to 250,000 won at the 3 p.m. close in Seoul. Japan's Nippon Steel Corp., the world's third-largest steelmaker, fell 2.4 percent to 410 yen at the 3 p.m. close in Tokyo.

Shares of Portman Ltd., Australia's third-largest iron ore producer, rose 21 cents, or 3.7 percent, to A$5.96. Shares of Melbourne-based BHP fell 72 cents, or 2.4 percent, to A$29.93 on the Australian Stock Exchange at the 4:15 p.m. close. London- based Rio's shares fell A$1.65, or 2 percent, to A$82.55. Mining stocks today fell following a plunge yesterday in metal prices.

Chinese steelmakers want a bigger say in setting prices after tripling imports in the past five years and overtaking Japan as the single-largest buyer in 2003. Global benchmark prices have traditionally been set by Japanese or European steelmakers with iron ore producers.

Nippon Steel is also still in negotiations with iron ore suppliers and hasn't settled prices, spokesman Hiroshi Nakashima said by phone from the steelmaker's Tokyo headquarters today.

``It'll be interesting to see what the Chinese and Japanese steelmakers decide on, I don't think they will be happy with the price increase,'' said Atul Lele, who helps manage about $270 million at White Funds Management in Sydney.

Japanese rivals JFE Steel Corp. and Sumitomo Metal Industries Ltd. also haven't settled prices, their respective spokesmen Hiroshi Okamoto and Toshifumi Matsui said by phone. Posco is also still in talks, Bae Hyo Seop, an official at the company's public relations department, said by phone in Seoul.

A 19 percent iron ore price gain will raise steelmakers costs by about $12 a ton, or about 2 percent of hot-rolled coil prices, according to Feng Zhang, a Hong Kong-based JPMorgan analyst. It takes about 1.6 tons of iron ore to make one ton of steel. Hot-rolled coil is a benchmark steel product.

The 19 percent gain applies to Carajas and Southern System fines, Vale said in its statement. Fines ore is the global benchmark for the steelmaking raw material, accounting for 60 percent of trade. The price increases doesn't include shipping charges and insurance said Vale's spokesman Fernando Thompson.

Vale had been pressing for a 24.6 percent increase to reflect surging demand in China, the world's largest ore consumer and steel producer. Asian steelmakers are likely to have to accept the price increases, Catarina Pedrosa, head analyst with Banif Investment Bank in Sao Paulo said yesterday.

Every 1 percent increase in iron ore prices will add $29.6 million to Rio's profit, and $21.4 million to BHP Billiton's profits, said Tony Robson, an analyst at Global Mining Research, in Sydney.

``It's a good increase considering most people were expecting a 10-15 percent gain,'' said Peter Chilton, who helps manage $800 million at Constellation Capital Management in Sydney, including BHP stock. ``Now, we'll have to see if it flows through to'' BHP and Rio, he said.

BHP Billiton, the world's largest miner, may post a profit of $9.6 billion for the year ending June 2006, according to the mean estimate of 12 analysts surveyed by Thomson Financial. Rio Tinto, the world's second-largest miner by market value, may post a profit of $6.8 billion for 2006, according to 11 analysts surveyed by Thomson.

BHP and Rio last October announced expansion plans for their West Australian operations that will cost a combined $2.65 billion. Vale in January said it plans to invest $2.1 billion on iron ore mines this year.

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