Rio Tinto, BHP Billiton Say Iron Ore Price Talks Continuing
July 01 2009 - 2:17AM
Dow Jones News
Rio Tinto Ltd. (RTP) and BHP Billiton Ltd. (BHP) both confirmed
Wednesday they are continuing iron ore contract price negotiations
with Chinese steel makers.
The miners have agreed price cuts of between 33% and 44% with
steel mills in Japan and other Asian countries, but Chinese mills
are holding out for deeper cuts.
Rio Tinto Iron Ore Chief Executive Sam Walsh has said that some
of the miner's contracts expire on June 30, and that if no price
agreement was reached by that date they could be annulled leaving
steel mills to purchase iron ore in the spot market.
A spokesman for Rio Tinto declined to comment Wednesday on
whether these contracts had now expired and migrated to the spot
market.
He said he could confirm that, in line with statements from the
China Iron & Steel Association, price talks were
continuing.
There have been some signs that the Chinese may be softening
their stance with Hebei Iron & Steel Group Co. Vice General
Manager Tian Zhiping Tuesday saying that, while Chinese negotiators
still want deeper cuts than those accepted by Japanese mills, they
would not necessarily push for the 40% cut to iron ore fines prices
which they had been seeking previously.
The stand off over pricing between the biggest producers and
world's biggest consumer or iron ore is putting pressure on the
decades old benchmark system of pricing the key steelmaking
input.
BHP Billiton has been arguing for a change to an indexed pricing
system that would see prices reset more regularly with reference to
one of the iron ore indexes now operating, in an effort to better
reflect shifts in the market during the year.
The Australian Financial Review newspaper reported Wednesday
that, while the dispute over pricing drags on, BHP is allowing some
Chinese mills to buy ore at indexed prices which are in line with
the new benchmark.
A spokesman for BHP declined to comment on the report, but
confirmed that price talks are continuing.
-By Alex Wilson, Dow Jones Newswires; 61-3-9292-2094;
alex.wilson@dowjones.com