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| Iron ore price negotiations - No more annual contract - FT - 22 Mar, 2010 | ||
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The Financial Times said, citing an unidentified senior executive involved in the talks, reported that global miners and Japanese steelmakers have reached a tentative deal to replace the 40 year old iron ore pricing system based on annual contracts and lengthy negotiations with short term contracts linked to the spot market. The report cited a senior executive involved in the talks as saying that "There is an understanding on both sides to move to quarterly pricing. The negotiation is no longer about annual contracts." FT report however said that the miners still need to resolve significant obstacles to reach a final deal. Miners have pushed for several years to move away from an annual benchmark price system which evolved in the 1970s and 1980s with the emergence of Japan as a steel superpower. But the explosion of China's steel sector, growth of the spot market and a spate of Chinese defaults on contracted material two years ago means the benchmark is less relevant. Spot iron ore prices are trading at twice the level of the 2009 benchmark. A move towards quarterly coking coal contracts was announced earlier this month by BHP and analysts expect iron ore miners to cite it as a model. (Sourced from FT & Reuters) | ||
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