Bloomberg reported that Vale SA and BHP Billiton Limited ended a 40 year system of setting annual prices by signing short term contracts with Asian mills, with the Brazilian company winning a 90% increase.

Mr Toshifumi Matsui spokesman of Sumitomo Metal Industries Co said that it agreed to pay Vale USD 100 to USD 110 a tonne for the quarter starting April 1st 2010.

BHP said it will sell the majority of its production to Asian steel mills on shorter term contracts without giving pricing.

Mr Ben Potter, an analyst at IG Markets Limited in Melbourne, said that "This represents a significant win for BHP Billiton over Asian steel mills who have long resisted the move away from annual contract pricing."

Mr Pedro Gutemberg director for marketing and research at Vale said that Vale wants a new pricing system to improve pricing flexibility, predictability and transparency. He didn't confirm the price agreement with Sumitomo Metal. He added that "For us, the benchmark system is old, so we decided to go this route."

(Sourced from www.bloomberg.net)