According to Rio Tinto Iron Ore Chief Executive Sam Walsh, it is unlikely that Chinese steel mills will agree to a new contract iron ore price this year.
Speaking to the ABC radio in Perth, Mr. Walsh commented, "Rio Tinto is still waiting for Chinese steel mills to recognize a benchmark price deal struck with Japanese mills in May," and added, "Meanwhile, the spot price for iron ore has actually risen over the benchmark price, which actually means that they get a pretty good deal if they agree to the benchmark."
"But we're due to start next year's negotiation shortly, so it looks like it all might be wrapped up into one," Mr. Walsh stated.
China has not accepted Rio Tinto's 33 percent price cut agreed with other major Asian steelmakers, arguing that the discount should have been 40 to 45 percent.
Relations between China and Rio Tinto subsequently became strained because of the arrest of Rio Tinto China executive Stern Hu in July on charges of industrial espionage and bribery during fraught iron ore negotiations.
Smaller Chinese steel mills paid an average of 77 percent more than their larger competitors for iron ore during the September quarter, as tough negotiations with producers left many paying spot prices, according to recent analysis.
Earlier this week, Goldman Sachs JBWere raised its iron ore price forecasts, following continued strong demand in China and predicted that contract prices for iron ore fines will rise 20 percent in the Japanese fiscal year ending March 31, 2011.