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Vale of Brazil, the world's biggest iron ore producer, has raised tensions in a mounting dispute with its European customers by calling on the European Commission to investigate possible "breaches of competition rules" by Eurofer, the European iron and steel industry association.
The move is a frontal response to Eurofer's allegations last month of "anti-competitive behaviour and even co-ordinated price behaviour in the iron ore market" after the collapse last week of the 40-year-old iron ore pricing system.
Vale and Anglo-Australian groups Rio Tinto and BHP Billiton control about 70 per cent of the world's seaborne ore market.
Vale's showdown with its European customers has taken the dispute to a new level, analysts said.
"This is a much stronger tone than you usually hear from Vale," said Pedro Montenegro, an analyst at Banco Brascan in Rio de Janeiro. "I've never seen them take such a combative stance."
Vale yesterday tried to turn the tables on the European steelmakers, saying it had written to the European Commission asking it to investigate possible "co-ordinated action by Eurofer's members in their approach to ongoing negotiations with Vale".
The miner also denied any co-ordinated action among iron ore producers. "We do not discuss or share information on our price strategies with any competitors," it said in its letter.
The dispute comes as the iron ore and steel industries abandon a benchmark price system for iron ore based on annual prices and lengthy negotiations in favour of short-term pricing linked to the spot market.
Last month, Vale and BHP Billiton agreed with Japanese and Chinese steelmakers to ditch the existing pricing system but European steelmakers are resisting any change.
The new price system will lift the cost of iron ore to Asian steelmakers to about $110-$120 a tonne during the April-June period, up between 80 and 100 per cent from the $60-a-tonne level at which the 2009-10 annual contracts were settled.
The cost of iron ore on the spot market is climbing further, suggesting that steelmakers will have to pay even more during the third quarter of the year. Elsewhere in the commodities market, oil climbed to a fresh 18-month high yesterday, putting pressure on the Opec oil cartel to revise its production targets.
A series of encouraging reports on employment, manufacturing and housing over recent days have boosted confidence in the recovery, allowing the market to record its sixth straight session of gains.
Nymex May West Texas Intermediate hit an intraday peak of $87.09 a barrel and was later up 22 cents to $86.84.
ICE May Brent rose 27 cents to $86.15 a barrel.
Olivier Jakob, of consultancy Petromatrix, said $90 a barrel for WTI futures was "a possible technical target if the momentum can be maintained for a few more days".
Gold prices hit their highest in a month as some investors sought protection amid worries of currencies volatility if China moves to revalue the renminbi.
Spot bullion in London rose to $1,139.2 a troy ounce. Silver prices rose to $18.13 an ounce, near its highest level since January.