Tensions that occur between iron ore producers in the world Rio Tinto and Chinese steelmaker to give experience to the company’s iron ore producers and steel companies to set up a system of iron ore sales contracts more transparent.

The last few months, the price of iron ore that is agreed between iron ore producers and steel companies of varied. Company steelmaker Japan and Korea have agreed discounts 33% iron ore provided by the iron ore producer Rio Tinto. However, the discounted contract price of iron ore declined by 33% associated company of Chinese steel. Brazilian iron ore producer, Vale agreed discounted price of iron ore contract with the Italian steel company of Turkey and 30%.

Some market observers think mine material trade, the negotiations determining the contract price of iron ore iron ore producers and steel companies is the effort to control the price of iron ore trade. Request discounts contract iron ore from the steel company is a form of resistance to mining companies which have become the ruler that determines the price of iron ore. Conditions are different when the global economic crisis that the countries producing iron ore, the steel companies to pressure to lower the price of iron ore.

The situation faced by producers of iron ore and the steel company at this time, cause some opinions to change the system the price of iron ore contracts.

China as the biggest iron ore consumer, to give opinions of the new system the price of iron ore contract is done every quarter, not each year as at this time. Quarterly sales of iron ore – is almost entirely used to make steel – will mean that global steel prices will become more volatile.

Theoretically, steelmakers will pass on lower prices to buyers and increase them in the back. They may also tend to be more dependent on supply and demand market, and less on the criteria of the quiet, as happened at this time.

Last year, steelmakers were locked into annual pacts when the price of iron ore fell. The spot price of iron ore is about $80 a metric ton, compared with this time last year when prices topped $120 a metric ton.

Steelmakers are betting the price will continue to fall, and so prefer longer-term contracts. Likewise, big buyers of steel, such as auto makers, prefer longer-term agreements when prices are favorable because it allows them to rely on a predictable amount of steel coming into their plants, ensuring efficient operations.

The current process largely involves one miner negotiating behind closed doors with one big steel maker. All miners and steelmakers generally adopt the outcome from those annual negotiations.

For miners, the proposed changes may make profits fluctuate. But in the long run, the short-term pacts could shake out high-cost ore producers.

Ian Ashby, chief of the iron-ore division at Australia-based BHP Billiton, the world’s largest miner, says lower-cost producers of iron ore, such as his company, function better in a quarterly system.

“The spot market is where buyers and sellers meet to find the true market price for iron ore,” said Mr. Ashby, quoted in a transcript from a bank-investors meeting in Australia in May. “From my perspective it should be clear to everyone that the changed market dynamics, created by China’s voracious appetite for iron ore over the past five years or so, makes obsolete a system whereby pricing is locked in for 12 months, based on little or no transparency.”

BHP Billiton has been pushing to abolish the current iron-ore pricing system. Brazil’s Vale S.A., meanwhile, has lobbied to keep the current annual contracting system. Brazilian ore is more expensive than Australian ore, so is at a disadvantage in spot pricing.

Rio Tinto, based in the U.K. and Australia, which sells about half of its iron ore on the spot market, hasn’t taken a strong public stance.

Changes to the pricing system have been in the works for at least a year, but they were hastened by China’s detainment of four Rio Tinto executives, which has spooked miners, who want to placate their biggest customer.

Some opinions, so that grown system for the determination of the contract price of iron ore and iron ore producers of steel companies. All components involved in the iron ore trade expects a system that is better to set the iron ore trade.

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