Warwick Smith, Australian miner Rio Tinto's marketing director, has stated that customers can select a new pricing model, such as a monthly price, index price, etc., and not necessarily adopt only the current quarterly pricing system, according to the Australian Financial Review. This position indicates that Rio Tinto is open to using a short-term pricing model. Mr. Smith also stressed that monthly and quarterly pricing systems can co-exist.
This strategy is similar to that of another iron ore giant, Australia's BHP Billiton. As the initiator of the index-based price, BHP Billiton has provided customers with a variety of pricing systems, including quarterly, and monthly pricing systems.
Bao Yi, CEO of Rio Tinto in China, had indicated in January this year that Rio Tinto would continue to use the quarterly pricing model. However, the miner now shows an obvious openness toward the short-term pricing system.
Meanwhile, an official at a Chinese steel producer has said he has learned that Rio Tinto will change its pricing model, but has not yet received new offer documents.