China Seeks New Iron Ore Price Model, Holds Talks With Miners

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China, the world’s biggest iron ore buyer, said it’s held talks with Vale SA, Rio Tinto Group and BHP Billiton Ltd. to set up a new pricing mechanism after a plunge in cash market prices.

“We hope to build a new stable, transparent, fair and reasonable pricing mechanism,” Zhang Changfu, vice chairman and secretary general of the China Iron and Steel Association, told reporters today in Beijing. “We wish to make it more well- organized and healthy.” Iron ore prices for immediate delivery fell 32 percent this month on China’s credit tightening and slowing steel demand from builders and automakers. Most Chinese customers are seeking to replace quarterly contracts with spot pricing, the largest ore producer, Vale, said last week. Baoshan Iron & Steel Co., China’s biggest mill, is in talks with Vale on fourth-quarter ore prices, and expects its raw- material costs to...