31st October 2011
Commodity traders could be switching to short contracts as the price of the iron ore has plummeted in recent weeks.
The commodity has seen a significant slump from mid-September, losing 34 per cent of its value in the last six weeks, Reuters reports.
As a result, investors are questioning the prudence of present practices of pricing contracts on the previous quarters spot rates, as investors are now seeing vast differences between actual commodity values and contract rates.
However, Fairfax mining analyst John Meyer told Reuters: "There is an ongoing shift to spot pricing but I think many companies will resist this and although there may be more spot pricing done this year, I would not call the end of quarterly pricing."
Meanwhile, the news provider reported last week that gold prices declined on Friday morning following a cooling of risk appetites after the successful completion of the EU summit meeting regarding the region's ongoing debt crisis.
Posted by Andrew Cottrill
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