Is this iron ore's new normal? Rio cancels tender over lowball bids

World number two iron ore miner Rio Tinto (ASX, LON, NYSE:RIO) is expected to cancel a tender for 64.5% ore from its Palabora mine in South Africa because bids were too low.

While Platts could not get comment from Rio itself,  the market news  provider reports a bid for $161 a tonne was rejected.

Platts quotes a customer for the cargo based in Hunan, China as saying: "The PMC tender was probably canceled because [Rio Tinto expected] higher prices and bids weren't high enough," while a Singapore trader said that "with spot prices going up so much of late, the miner was probably pushing up its target price."

The benchmark CFR import price of 62% iron ore fines at China's Tianjin port has added more than 8% to $158.50 just since the start of the year.

Many market commentators said September's pullback to below $90 may have been an overcorrection, but was indicative of greater pricing power by China's steel mills – the country consumes almost 60% of the 1 billion tonne seaborne iron ore trade.

But the astonishing 80% surge in the price since then may show that the big three – Rio, Vale and BHP Billiton – can still wield considerable power.

Whether the heady days of two years ago when the prices hit $192 will ever return remains questionable.

Rio may also just be making the most of the South African operations ahead of its sale.

The Australian giant and Anglo American (LON:AAL) announced in December they are selling a 74.5% shareholding in Palabora Mining to a consortium of Chinese and South African firms, in a deal valued at about $611 million.

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Image of Sinosteel, China's number two importer of iron ore by TonyV3112 / Shutterstock.com