According to Mr Jeffrey Kabel executive director of global ferrous products at JP Morgan, the discrepancy between global iron ore and steel prices could lead to a shorter term pricing system than the quarterly adjustments currently used by Brazilian iron ore giant Vale and multinationals BHP Billiton and Rio Tinto.

The quarterly backward looking pricing mechanism creates a discrepancy between prices under contract and the spot market.

Mr Kabel said such differences are expected to lead to monthly adjustments for iron ore prices, which could finally move to a spot-based mechanism. He said that as a result coking coal and scrap would also move to a monthly pricing system.

Mr Claudio Alves Vale director of iron ore sales for the Americas said that so far clients have not requested the implementation of a monthly pricing model.

In early 2010, Vale implemented the quarterly system for its iron ore, putting an end to the benchmark model that had been in place for 40 years and under which prices were set for an entire year.

(Sourced from http://www.bnamericas.com)