BHP, Rio to get 85% rise on China iron ore: report

BHP Billiton and Rio Tinto are set to get an 85 per cent price rise on iron ore exports to China, as industry sources reveal it is now likely freight premiums will be included in Chinese contract prices,  The Australian Financial Review reports.

Local miners have gained the upper hand in negotiations as Chinese steel makers look to avoid spot market prices that are much higher than the benchmark price, an industry source told the paper.

Brazilian iron ore giant Vale has already achieved a 71 per cent increase on its contract prices to Chinese steel mills.

Australian companies have argued that their contract prices should include a freight premium because it is cheaper to ship iron ore to China from Australia, than from Brazil.

A BHP Billiton source told the paper the Chinese spot market had again begun selling Australian iron ore, after the limitations on Australian shipments "backfired badly".

Chinese traders have also recently increased the amount of iron ore they buy from Australia in anticipation of a steep rise in contract prices, 21 Century Business Herald reports.