This time last year, it was all doom and gloom. The Asian economy was on the skids and Japan’s steel industry virtually on its knees as industrial production slumped.

The end result was a 10-11% cut in iron ore prices for the 1999-2000 Japanese fiscal year.

But the situation appears to have rapidly reversed. For instance, Japan’s September steel production of 8.1 million tonnes was nearly 1Mt higher than market expectations.

“Significantly, the latest statistics continues the July breakaway from 19 straight months of year-on-year decline,” said stockbroker CIBC World Markets. “There is a strong possibility for Japanese steel production to finish the JFY at more than 97Mt, which will be positive for iron ore prices.”

The Australian iron ore miners started the long-winded price negotiations with their Japanese customers in late October, and an outcome should be known early in 2000. The betting is for either a rollover of current prices or a small increase.

“I’m banking on a 2-3% price increase,” said CIBC analyst, Siang Wee Quek. “The other scenario is for a rollover. I’d say it is a 50:50 chance.”