At a recent mining conference in Perth, the capital of the iron ore industry in Australia, delegates were asked to put their hands up if they thought the current system of annual iron ore negotiations would still exist in five years’ time. Very few hands were raised.

The current system, known as the “benchmark”, has been the cornerstone of the iron ore market since the 1960s. Miners Rio Tinto, BHP Billiton and Vale of Brazil sit down every year with Chinese steel mills in secretive negotiations to thrash out prices for contracts for the year beginning April 1. In former years the lead role was played by the Japanese mills.