The iron ore pricing mechanism has evolved, driven by China's demand for greater choice in index options. The market has shifted from a single index to multiple basket-based pricing combinations, complicating price discovery and hedging. Miners now offer both fixed-price and floating-price deals, with fixed-price trades becoming dominant. This fragmentation risks disconnecting physical and futures markets, reducing offshore hedging efficiency. A standardized approach to index baskets could improve pricing clarity and market stability. China's push for pricing changes adds further pressure to the global market.

Join for free to read