SHANGHAI, Jan 14 (Reuters) - Mining giant BHP Billiton Ltd (BHP.AX)BLT.L has begun auctions for spot iron ore shipments to Chinese steel mills, local media reported on Friday, marking the latest shift in its pricing strategy to cash in on rocketing prices.
BHP, the world’s No.3 iron ore producer, has started to auction a 170,000-tonne spot iron ore shipment every fortnight to Chinese customers, the China Securities Journal reported, citing a procurement manager at an unidentified steel mill in southern China.
A tight supply market, combined with fast-rising spot prices, meant that BHP was unwilling to extend even quarterly prices to new customers, the paper reported, forcing many steel producers to buy iron ore either priced on a monthly basis or to take extra spot market shipments.
Spot iron ore prices were on course to hit an eight-month high on Thursday, after all major price indexes rose to trade as high as $184 per tonne, powered by sustained Chinese buying and supply concerns as a tropical cyclone threatens to interrupt production and shipments in top exporter Australia. [ID:nL3E7CD02I]
Last March, all three major iron ore producers, including Vale SA VALES.SA and Rio Tinto Ltd (RIO.AX)(RIO.L), agreed with Asian customers to shift pricing for the majority of its iron ore to shorter term contracts based on market-cleared prices and on a landed basis. (Reporting by Fayen Wong; Editing by Chris Lewis)