BHP Billiton finally moving on iron ore pricing

BHP Billiton finally moving on iron ore pricing. Finally, in my opinion, for what it is worth. The biggest mining company in the world will move a large portion of their customers to shorter term contracts. The WSJ piece: BHP Moves to Short-Term Ore Contracts spells it out pretty well. Again, this is probably a consequence of the Chinese authorities whole involvement in the bribery scandal that rocked Rio Tinto. Leading of course to the sentencing of four Rio employees yesterday.



I noted a very long press conference from the Australian foreign minister yesterday which we watched on the other TV in the morning. Minister Stephen Smith making a few interesting points, which the WSJ has interpreted as The Rules in China. Well written and worth a read here folks, gives a great background on how we got to this point.




The rules have definitely changed, with regards to iron ore pricing. Perhaps this is another sign of the Japanese steel dominance having waned over the last decade, and new entrants such as the South Koreans and Chinese in a serious way. You think? Still, there is a level of secrecy with their respective customers. Plus with the conclusion of these talks it is a reminder if you needed one that the quarter is two days away from ending. Tomorrow being the last day. Read the Bloomberg take: Vale, BHP End Annual Ore Talks; Vale Wins 90 percent Jump




What is the biggest obstruction with one universal iron ore price? Well, my free subscription ran out at the Steel Index and I could not stomach paying around 380 Euros for an annual subscription of a daily price for iron ore, but there guys supply a list for iron ore fines. Iron Ore Reference Prices from the Steel Index.



So many different grades from different parts of the world. But surely the majors should have their contract prices visible and tradable? Because as you can imagine not all oil extracted by the majors is of exactly the same quality? A whole bunch of T-Rex's versus a whole bunch of Brontosauruses that died in different places in the forest are I guess not exactly the same. Back in the Mesozoic Era. What is more important, are the plants the dinosaurs died amongst. Oil of the past.