The global iron ore negotiation price-fixing system began in 1981 and it has been for 28 years till now. The benchmark price-fixing system was held in the fourth quarter every year, in which the world’s major iron ore suppliers made negotiations with other major customers to decide the next year’s iron ore FOB price, and if any one supplier reached the iron ore contract with steelmills, the others should accept the negotiation result.
Principles of traditional iron ore benchmark pricing system
Ⅰ. The price reached in the first round of negotiation will be accepted by the rest rounds of negotiation and became the standard price-fixing for the whole year, in which, buyers will not purchase from other sellers with higher price in the future negotiation and sellers will not sell to the buyers with cheaper price too.
Ⅱ. The same product variety only has one price rising standard, that is to say, they only set the price rising for the various varieties of products, not considering the different price rising for the different quality of the same variety. Every variety only has one price rising standard in the five- year straight negotiation from 2003 to 2007, with the exception of Vale’s BF pellet ores.
Ⅲ. Iron ore price was set by FOB price, not including ocean freight and other charges, for more visit: chinametalbiz.com
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