China steel mills force Vale to bend over iron ore pricing
The world's number one iron ore producer Vale is considering shifting from iron ore pricing based on the previous quarter’s prices to levels more aligned with the spot price the company's chief executive said on Tuesday.
The Brazilian company's new willingness comes after more Chinese steel mills seek to postpone shipments or default on contracts as spot iron ore prices drop from historic highs above $170 to levels of around $150. BHP, Vale and Rio Tinto control nearly 70% of the 1 billion tonne annual iron ore seaborne trade and dominate price talks which in the past were characterized by secretive negotiations and annual contracts. Just last week global number one miner BHP Billiton announced plans to create a new, more transparent system for pricing iron ore called Global Ore by the end of the year or early next year.