Rio Tinto, Fortescue Switch Iron Ore Price Benchmarks for China

1. Two leading mining companies, Rio Tinto PLC and Fortescue Ltd., have stopped using a primary iron ore price index (Platts Iron Ore Index by S&P Global) for shipments to China, following direction from China’s main commodities buyer to use alternative benchmarks. This highlights China’s increasing power as the world’s largest iron ore importer, especially amid a period of ample supply in the global market [para. 1].

2. Starting from January, Rio Tinto shifted its pricing reference for Chinese shipments from Platts to a Fastmarkets Ltd. index. Simultaneously, Fortescue switched to a blend of indexes run by Argus Media Ltd. and China’s Mysteel Global. The changes were implemented at the behest of China Mineral Resources Group Ltd. (CMR), a state-owned entity established in July 2022 to centralize China’s iron ore procurement [para. 2][para. 3].

3. Neither the mining companies nor CMR commented on these changes. S&P Global, which operates the Platts index, declined to discuss individual company decisions. The intervention came after a CMR executive criticized the Platts index at an October conference, labeling it as unfair and unrepresentative of actual market dynamics. CMR now leads negotiations for long-term contracts on behalf of China’s steel manufacturers [para. 4][para. 5].

4. While international price indexes like Platts are determined by spot market trades, Chinese steel mills mostly use annual, long-term contracts, creating a mismatch in pricing models. Traditionally, fragmented negotiations between numerous Chinese steelmakers and global miners weakened China's bargaining leverage. Around 60-70% of China's iron ore imports are secured this way [para. 6][para. 7].

5. The creation of CMR was intended to balance this power dynamic. As a single major buyer, CMR strengthens China’s negotiating position, as explained by a steel industry insider. Currently, an oversupplied market and weaker demand in China, driven by the end of high-growth development years and a cooling real estate sector, have further improved buyers’ leverage [para. 7][para. 8].

6. Industry experts believe this shift marks an era where buyers have broader negotiation space, prompting changes not just in contract terms, but also in which price indexes are used. This could ultimately reshape the way the iron ore market references price benchmarks [para. 9].

7. The index landscape is also changing due to newer benchmarks, demand shifts, and the rise of yuan-denominated settlements. Providers are jockeying for market positioning as the market structure evolves. In September, the Beijing Iron Ore Trading Center (COREX) introduced the Iron Ore Portside Index, which tracks spot iron ore prices at major Chinese ports and reported 2025 trading volumes exceeding 100 million tons, with around ten times more yuan-based deals than those in dollars [para. 10][para. 11][para. 12].

8. Supporters say the portside market’s diverse participation makes it harder to manipulate, and the new index more accurately reflects real market demand. CMR aims for the portside index to reshape international pricing, which is currently dominated by U.S. dollar benchmarks linked to shipping cargoes [para. 13][para. 14].

9. A steel industry veteran suggested the portside index more truly mirrors what steelmakers are willing to pay, potentially resolving a chronic flaw in the Platts benchmark, which is often seen as favoring miners. International mining firms are also taking note: in November, 10 companies, including Australia’s Hancock Iron Ore, pledged to gradually adopt the Chinese index [para. 15][para. 16].

10. When asked, Rio Tinto leaders stated they will adapt to customer preferences. The index market is now in a trial phase, with both miners and mills experimenting with different benchmarks, leading to a period of uncertainty and diversification in the market [para. 17][para. 18].