Rio Tinto Group said the new quarterly pricing system for iron ore sales may be scrapped if steel mills opt to buy cheaper spot cargoes of the raw material.

Mr Tom Albanese CEO of Rio Tinto in an interview at the Fortune Global Forum in Cape Town said that “If the spot price drops below quarterly pricing and the steel mills basically force us to sell at that lower spot price that will probably be the end of quarterly pricing.”

Mr Albanese said that “The customers were viewing that long-term contract as a one way option. That wasn’t something that would be commercially acceptable from our perspective.”

Sanford C Bernstein Ltd analysts said that the quarterly price for the period starting July 1, based on the average spot price for the three months from March, may rise about 30% to USD 152 a tonne.

According to The Steel Index, the spot price declined 1.5% to USD 139.70 a tonne. That’s an 8% discount to the estimated quarterly price.

(Sourced from Bloomberg.net)