BHP Billiton sweetens indexed pricing

May 26, 2008

May 26 (Business Spectator) – BHP Billiton is offering Chinese steel mills discounts to introduce them to the concept of indexed pricing as well as drive a larger volume of spot sales, a mining industry source told The Australian Financial Review.

The miner plans to sell all its iron ore at an indexed price once its existing contracts expire, but Chinese mills until now have been slow to warm to the indexed pricing, claiming it would undermine their stability and profits.

The discounts are at odds with the current push to extract a freight premium from the Chinese.

Both BHP Billiton and Rio Tinto remain locked in a fierce battle against the Chinese over contract pricing for the 2008-09 Japanese fiscal year.

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