Friday, April 9, 2010

Rio Tinto (ASE:RIO) Now Doing Quarterly Iron Ore Contracts

Rio joins competitors in quarterly iron ore contracts

Joining its major competitors Vale (NYSE:VALE) BHP Billiton (ASE:BHP), Rio Tinto (ASE:RIO) announced it'll be dropping the annual iron ore contracts for quarterly one, which will better reflect current iron ore prices.

Now that the major three iron ore providers have changed to the quarterly contracts, the rest of the industry is expected to follow in their footsteps.

While most felt this was going to happen, as late as yesterday Rio had asserted they would be more than willing to offer benchmark pricing, or a mixture of benchmark and short-term pricing contracts.

With their major competitors abandoning the annual contracts, Rio could have been at an extraordinary disadvantage if pricing worked against them, which it more than likely would have.

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