Reuters reported that Chinese steel makers are unlikely to drop their current long term contracts with Australian iron ore producers and move to the spot market instead.

The report quoted Lindsay Tanner Australian Finance Minister as saying that the contract system, which traditionally governs Australia's AUD 14 billion in annual iron ore exports to China faces an uncertain future with Chinese steel mills unable to agree contract pricing this year with major iron ore miners.

Tanner said that "I think that's an unlikely scenario because the important thing for countries like China to have is reliability of supply, consistency of supply. Therefore I think it's unlikely that you would see the contractual patterns that we have seen in the past disappear.”

(Sourced from Reuters)