Anglo-Australian miner Rio Tinto PLC (RTP) expects provisional iron ore pricing agreements with China's steelmakers to provide the starting point for negotiations on next year's settlement, a senior executive said on Friday.
"I don't expect there will be an early settlement," Sam Walsh, chief executive for Rio Tinto's iron ore division, said at an investor presentation.
Walsh said the outlook for iron ore is positive, with demand strong and steel consumption within China robust.
"We can't meet the demand we are seeing from the market," Walsh said.
That may point to expectations of higher prices for iron ore among miners, a key ingredient in steelmaking. But Walsh acknowledged a "difference of opinions" heading into negotiations.
Chinese mills earlier this year reached provisional price agreements with iron ore producers on the same terms as those offered to other Japanese, Korean and other Asian mills, but insisted those agreements were subject to any final deal reached by China Iron & Steel Association, the country's lead negotiator this year.
CISA was demanding larger price cuts to the annual benchmark price than the 33% offered by Rio Tinto and other miners.
The talks have created tension between miners and steelmakers and boosted speculation that negotiations have become politicized. China detained Rio's chief iron ore negotiator Stern Hu and other employees earlier this year, accusing them of stealing commercial secrets.
Source: Dow Jones
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