According to media reports, major iron ore exporters, including BHP Billiton and Rio Tinto, have reached a preliminary agreement to move away from annual contract pricing to quarterly arrangements.
The short term iron ire pricing contracts would be linked to the iron ore spot price, which would see iron ore prices more than double from the present $US 60 per ton top $US 130 per ton or more.
The Financial Times London reported unknown company executives as confirming the move away from annual pricing agreements. If the new system evolves, it will in fact mirror the quarterly pricing arrangement BHP won earlier this month for coking coal with customers in Japan, Europe and Korea. That saw BHP Billiton win price rises of 55% for hard coking coal, the best quality coal there is for the steel industry.
The FT said in its report that “The miners, including Vale of Brazil and UK-based BHP Billiton and Rio Tinto and steelmakers such as Nippon Steel, JFE, Sumitomo Metals and Kobe still need to resolve significant obstacles to reach a final agreement”. Continue reading