further move away from contract (lower) pricing towards spot market.
This is more good news for Moly:
MINING giant BHP Billiton says it has reached agreement to sell most of its iron ore on shorter term contracts.
"BHP Billiton today announced that it had reached agreement with a significant number of customers throughout Asia to move existing iron ore contracts that were previously priced annually onto a shorter term landed price equivalent basis," the company said.
"The agreements reached represent the majority of BHP Billiton's iron ore sales volume.
"The structural change that these settlements represent is consistent with BHP Billiton achieving market clearing prices."
IG Markets research analyst Ben Potter said the deal was a "significant win" for the company over Asian steel mills, who had been resisting moves away from annual contract pricing.
Start of sidebar. Skip to end of sidebar. End of sidebar. Return to start of sidebar. "BHP Billiton appears to have convinced them that this is fairer and more transparent way of pricing that eliminates large discrepancies between spot and contract pricing,'' Mr Potter said in a research note.
"The question now remains at what price will these more frequent adjustments be set.
"This lays the foundations for the likes of Rio Tinto and Vale to follow down the same path."
The announcement follows a similar agreement BHP Billiton reached earlier this month with its coking coal customers in Europe, China, India and Japan.
At the company's half-year results briefing last month, BHP Billiton chief executive Marius Kloppers said the spot market was the ``best indicator'' of supply and demand.
"I always point people back to where is the market today as the best indicator of what the supply and demand is and as the best indicator of what expectations should be on where prices are heading," Mr Kloppers said on February 10.
MOL Price at posting:
80.0¢ Sentiment: ST Buy Disclosure: Held
