The Australian reported that what if they held iron ore negotiations to set the terms of an estimated USD 20 billion worth of trade between Australia and China this year and nobody came?
That is the scenario now being posited by former BHP Billiton China CEO Mr Clinton Dines. He said that "It's a monstrous waste of time."
He said that there is a fair chance that no one will negotiate and, like last year, no benchmark price will be reached between the Australian iron ore providers and China's steel mills.
As senior executives from BHP and the two other iron giants, Rio Tinto and Brazil's Vale, which share an effective oligopoly on high quality iron ore, prepare to face down increasingly aggressive Chinese steel mills, prices are soaring again for the red dirt that it is essential for China's massive urbanisation and infrastructure programs.
China's biggest steelmaker, Baosteel, has publicly admitted that producers will seek a price hike of up to 30% this year, a rise that it says it will not be able to accept.
Mr Malcolm Southwood analyst at Goldman Sachs JBWere said that the seaborne market for iron ore is genuinely tight. He added that "Seaborne trade is expected to grow by over 100 million tonnes this year, which is twice the average growth rate seen during the past five years. Supply will inevitably catch up, but probably not until 2011. We expect supply and demand to be much more closely aligned from 2011-12 with potential for an oversupplied seaborne market from 2013-14. But 2010 should be a very good year for the suppliers."
This year, the Chinese are likely to find the Australian companies aligned at long last, and that may well be enough to torpedo the benchmark system forever.