The prices of steelmaking commodities iron ore and coking coal are demanded to be increased by the Global miners BHP Billiton, Rio Tinto and Brazil's Vale. The market is tight as there is a strong demand and supply from China.

These ascends come on top of increases of 90-100 per cent for iron ore and 55 per cent for coking coal in the second quarter, which prompted worries of higher prices in the budding nations. Mining and steel executives said, on average, iron ore prices for the third quarter would rise by 30-35 per cent, while coking coal prices would increase by 10-15 per cent, either pushing up the cost of steel.

This year the new scheme has 40-year-old benchmark system of annual contracts and lengthy price negotiations. According to the Steel and Mining Executives, iron ore prices would surge to $130-$135 a tonne, compared with $100 this quarter and $60 a tonne last year. Coking coal prices would hit $225 a tonne next quarter, against $200 in April-June and $129 last year.

Because of the use of different price formulas final prices will vary from Company to Company. In general, quarterly deals are set to be based on a three-month average of price indices for the period ending one month before the onset of the new quarter. Companies use different systems, including one- and two-month averages.