The Sydney Morning Herald reports that Fortescue Metals has declined an invitation by the China Iron & Steel Association to participate in pricing talks alongside its larger rivals Vale, Rio Tinto and BHP Billiton.
The miner is believed to prefer the role of an "interested bystander" for the time being.
Fortescue only sells its ore in the Chinese market and its smaller size and consequent dearth of leverage might raise concerns that steelmakers such as China's Baosteel might bounce Fortescue into an early, cheaper settlement.
It is unlikely that the 'big three' would accept a benchmark set by a smaller producer, particularly with the price set to fall for the first time in six years.
Chinese steelmakers are believed to be seeking a retraction of last year's price gains as part of the opening round of bargaining, along with equal prices for Australian and Brazilian ore and a move to quarterly pricing.
Meanwhile Macquarie Equities became the latest analyst to throw its hat into the preidction ring by forecasting that the lump price will fall by 40 per cent while the fines price would fall by 30 per cent. Most analysts are predicting falls in the range of 20 to 40 percent/
"This reflects the reality of an oversupplied iron ore market and a substantially weak steel market in 2009," said Macquarie analyst, Brendan Harris.
Mr Harris noted that the spot price is trading at a 20 per cent discount to the benchmark price after reporting strong gains last month.
Source: Sydney Morning Herald
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