Rio, Fortescue change benchmark used for China iron ore pricing

Rio Tinto Group and Fortescue Ltd, two of the world’s largest iron ore producers, have switched the index they use to price shipments for the world’s largest commodities consumer, a rare change that follows public criticism of the current mechanism from state-backed buyer China Mineral Resources Group.

Both Rio and Fortescue will stop using S&P Global Energy Platts Iron Ore Index — the industry’s seaborne benchmark — for term contracts, according to people familiar with the matter, who cited a notice given to steel mills affiliated with CMRG. They asked not to be named as they are not authorized to speak to the media.

Rio, which will switch for cargoes loaded for China in January and February 2026, will move to an alternative iron ore index published by Fastmarkets Ltd. The change is a trial for the last two months of the company’s long-term contract period with steel mills, the people said. CMRG had originally asked Rio to use Beijing’s new domestic iron ore index but Rio rejected the offer, with the Fastmarkets index seen as a compromise, one of the people said.

Fortescue will use an average of China’s Mysteel and the Argus Iron Ore Index. That trial will last for the period of time left in its long-term contracts with China’s steel mills, the people said.

Spokespeople for Rio and Fortescue declined to comment. S&P said it did not comment on index choices of individual companies. CMRG didn’t immediately reply to a request for comment.

CMRG said in late October that the way the industry sets prices is “irrational” and influenced by overseas futures markets, as US-dollar benchmarks are used. The agency has become more assertive this year, going as far as to ban some BHP Group iron ore products after long-term contract negotiations faltered. It has also sought to increase its influence by curbing the hoarding of iron ore at ports and creating an overseas trading body.

The state buyer is now negotiating with other top suppliers for next year’s shipments, including BHP Group and Vale SA.

As part of the ongoing talks, both Rio and Fortescue have agreed to extend their long-term supply contracts with CMRG by six months into 2026, according to the people. The period for the two miners is different, with Rio’s existing long-term contract originally due to expire in February next year, while Fortescue’s contract was supposed to end this month.

Reuters news agency earlier reported that Rio had dropped the Platts index, citing a client notice and a trader familiar with the matter.

(By Alfred Cang and Katharine Gemmell)