Rio Tinto Ltd. (RTP) could allow some of its iron ore contracts with Chinese steel makers to expire and sell the ore on the spot market if a pricing agreement isn't reached by the end of Tuesday, analysts said.

Rio Tinto has already settled annual contract price cuts of between 33% and 44% with steel mills in Japan, Taiwan and South Korea but the China Iron & Steel Association, leading the negotiations for the Chinese mills, is holding out for deeper price cuts.

Speaking to reporters during a recent conference, Rio Tinto Iron Ore Chief Executive Sam Walsh said some of the miner's contracts will expire on June 30, leaving steel mills to subsequently purchase iron ore in the spot market.

Rio Tinto spokesman Gervase Green declined Tuesday to discuss details of the miner's contracts with Chinese mills but said one option is for Chinese steelmakers to buy their ore on the spot market instead of through long-term contracts.

"We have been a longtime supporter of the benchmark system, but if the customers do opt to buy on the spot market instead, then they will be able to, but the ball is in their court," he said.

Rio Tinto would continue to deliver iron ore to its customers and could do so through a number of methods, including spot sales and long-term contracts, he said.

One analyst, who didn't want to be named, said he believes Rio Tinto is likely to allow the contracts to expire and let them revert to spot sales.

The other two major iron ore producers - BHP Billiton Ltd. (BHP.AU) and Vale (RIO) - are sitting back and letting Rio and CISA hammer out an agreement, he said.

Rio's Walsh said earlier this month that the June 30 deadline had last year acted to accelerate a price settlement to nearly double prices on the year.

Once a contract expires, it needs to be negotiated from scratch. It's also not clear what will happen to tonnages supplied on a provisional basis, one analyst said.

The benchmark system runs from April 1 to March 31, the Japanese financial year. Should annual talks not settle before April 1, as is frequently the case, miners supply ore on a provisional basis that is later adjusted according to the eventual benchmark price.

ANZ senior commodity strategist Mark Pervan said that while the details of the structure of Rio's contracts remains hazy, it now looks likely those with a June 30 deadline could be allowed to expire.

China has built up a large stockpile of about 100 million metric tons of ore that could feed the local steel industry for four month, and this buffer meant CISA was willing to go past the deadline and risk contracts expiring, Pervan said.

The ore could be sold on a spot basis for a period while the parties hammer out a restructured pricing system but, with China being the world's biggest consumer of ore and Rio the second biggest supplier, an agreement would eventually have to be struck.

"Whether they annul or not, the point is that they need to sell to the same customer," Pervan said.

-By Alex Wilson, Dow Jones Newswires; 61-3-9292-2094; alex.wilson@dowjones.com

(Elisabeth Behrmann in Sydney contributed to this report)