ArcelorMittal, the largest steelmaker, said quarterly iron-ore supply contracts, which replaced four- decade-old annual benchmark prices, are here to stay.
“Never say never, but it seems that we’ll see quarterly contracts from now on,” Bill Scotting, head of strategy at ArcelorMittal, said in an interview today at an iron ore conference in Prague.
“The annual contracts are gone forever,” said Xianhong Li, managing director at Sinosteel Trading Co. Ltd., a unit of Chinese steelmaker Sinosteel Corp. “From now on, we’ll have quarterly contracts only,” he said in an interview.
Brazil’s Vale SA and Melbourne-based BHP Billiton Ltd., respectively the world’s biggest and third-largest iron-ore exporters, said last month they switched to quarterly contracts. London-based Rio Tinto Group, the No. 2 producer, is in talks to do the same. Mining companies are seeking to capitalize on spot prices for the raw material, which have more than doubled in the past year.
Gordon Moffat, the director general of Eurofer, a group representing steelmakers in Europe, said last month the move to quarterly contracts was provisional and that the annual benchmark may return. Baoshan Iron & Steel Co., China’s biggest publicly listed steelmaker and whose parent is representing Chinese mills in price talks, said today it’s a supporter of long-term contracts.