Dow Jones reported that Rio Tinto Ltd the world's second largest producer of iron ore would not give in to steelmakers' demand for a benchmark price cut of more than 40% below current spot prices for the 2009-10 contract years.
According to two analysts present at the briefing, Mr Sam Walsh who heads up Rio Tinto's iron ore operations said the miner was producing at capacity of 200 million tonnes annually despite steel demand so far remaining at subdued levels.
Mr Olivia Ker Merrill Lynch Analyst said "Rio was overall bullish on Chinese iron ore demand and that they were running at flat out capacity. They also said they won't settle below current spot prices."
Another analyst present at the meeting who declined to be named said "Mr Sam Walsh said it was impossible for them to settle below spot market prices. Their view seems to be that the traditional contract system will soon dissipate."
Steel mills have pressed for a price cut of up to 50%. Playing into their hands are rising stockpiles at Chinese ports that have reached 70 million tonnes close to last year's record of 74 million tonnes in September as traders earlier this year speculated on a recovery in China's steel demand.