This note discusses the structure and function of the market for iron ore. This marketplace has traditionally functioned using a standard pricing mechanism, in which substantial steel mills in Japan (now in China) negotiate the benchmark price with the largest of the big three iron ore companies (Vale do Rio Doce).
Yet this market is changing quickly, with the rise of China as the principal consumer of iron ore the rules seem to be transforming. The note examines the growing significance of the spot market for iron ore and the pros and cons of abandoning the benchmark price system for both consumers and miners.
PUBLICATION DATE: January 04, 2010 PRODUCT #: 710049-HCC-ENG
This is just an excerpt. This case is about STRATEGY & EXECUTION
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