Rio, BHP May Cut Quarterly Iron Ore Prices by 11%, Analyst Says

SHANGHAI, Aug. 26 -- Rio Tinto Group and BHP Billiton Ltd. may ask Chinese steelmakers to pay 11 percent less for fourth- quarter iron ore prices, researcher UC361.com said, citing average Platts index prices.

Prices may drop to $129 a metric ton in the quarter starting Oct. 1, down from $145.30 in the third quarter, Hu Kai, an analyst at UC361.com, said in an e-mailed note today. The fourth-quarter price for contract ore is based on the average index prices of 62 percent-iron ore for June to August minus freight rates, Hu said.

Rio, BHP and Brazil's Vale SA, which account for three- quarters of global iron ore trade, this year dropped a 40-year custom of setting annual prices in favor of quarterly agreements as they bet on rising prices. Spot prices fell from April amid concerns a Chinese government crackdown on property market would curb steel demand.

Contract prices for 65 percent-iron ore from Vale, the world's biggest iron ore exporter, may fall 8 percent to $133 a ton in the fourth quarter from the prior three months, Hu said.

Rio and BHP demanded a 99.6 percent increase for second- quarter prices and a 22 percent gain for the third quarter, Hu said.