Insiders discloses recently that BHP Billiton one of the largest iron ore supplier proposes to change current quarterly pricing to monthly pricing which is generally rejected by Chinese steelmakers. When market changes China is emboldened to say no to iron ore monthly pricing system.
Along with steel market which starts to regain in recent days, iron ore price gets back to upswing. It began increase from July 2nd in the spot market and has over 15% growth by now, which drives big three miners take advantage to push new pricing system.
In fact, long term price of iron ore gets closer and closer to spot level and exerts little influence on market. But, monthly pricing system will definitely worsen market speculation which will make steelmakers to confront more risks.
It is showed that the spot price of Fe63.5% Indian ore fines rose from USD155 per tonne to USD 157 per tonne CFR. It is much higher than the price of USD 147 per tonne which is heard as the term price for Q3 agreed between Rio Tinto and Japanese and Korean steelmakers. Domestic steel market warming up in recent month lends a support to spot iron ore price to have a growth. As a result, BHP seizes the chance to demand monthly price.
Mr Luo Bingsheng Executive deputy secretary general of China Iron and Steel Association attributed that current iron ore price speculation to miners chasing quick profits. He said ‘It not only sabotages the relation with steel mills but also worsen market fluctuation.’
For a long time, both iron ore suppliers and buyers are seeking a price frame of reference, but so far, no perfect result reached.