Reuters cited Ms Chen Ying Deputy General Manager of China's Baoshan Iron & Steel as saying that the company is currently buying iron ore based on quarterly prices calculated using Platts' iron ore index IODBZ00-PLT.

Ms Chen did not specify what proportion of Baosteel ore was being purchased in that manner, but said there were currently no negotiations involved in pricing iron ore. She was responding to queries in an online briefing.

She said "In the long term, only a more balanced distribution of profits between the upstream and downstream parts of the steel industrial chain can be of benefit to the overall health of the sector."

Iron ore prices were traditionally based on the benchmark, an annual contract price negotiated by major buyers and suppliers. But the three dominant global miners Rio Tinto, BHP Billiton and Vale abandoned the decades-old system last year after 2009 negotiations with top buyer China ended in acrimonious stalemate.

While China steel mills have already come to terms with a more market orientated pricing system, they continue to claim that the health of the sector is being harmed by the monopoly practices of the big three global iron ore suppliers.

(Sourced from Reuters)