Miner Anglo American PLC strongly believes that a half yearly pricing mechanism for iron ore would give more market stability than the current quarterly system.
Mr Stephan Weber CEO of Anglo's Brazilian iron ore unit Anglo Ferrous Brazil said that "Some clients wish to buy half yearly, others monthly. We believe the quarterly system won't last forever.”
Mr Weber said that "The new pricing mechanism is a result of the divergence between the benchmark and spot market prices.”
Miners and steelmakers worldwide agreed to introduce a quarterly pricing system for the steelmaking ingredient in April. This replaced the 40 year old annual or benchmark system that fell apart in 2009 when Chinese buyers declined to settle annual prices, purchasing more cheaply on the spot or cash market.
Some steelmakers claim the new system has led to more volatility in prices of both iron ore and steel.