The pricing system of iron ore mainly includes long-term cooperative pricing system and spot pricing system. The long-term cooperation system was once the most important iron ore pricing system in the world. The core of the long-term cooperation system was that the iron ore supply and demand parties locked the supply or purchase quantity through long-term contracts. The period generally reached 5 to 10 years, or even 20 to 30 years, but the price was not fixed. Since the 1980s, the long-term cooperative pricing system has gone through the evolution process of annual negotiation - quarterly index - spot pricing, and its pricing benchmark has also changed from the original FOB price to the current popular CIF price.

The negotiation of the pricing mechanism of the Long term Iron Ore Association to determine the annual iron ore price began in 1980 (fiscal year 1981) and has been running smoothly for nearly 30 years. The framework is: according to the practice, the world's major iron ore suppliers and their major customers negotiate each year to determine the iron ore price for the next fiscal year. Once the price is determined, the two parties will implement the agreed price within one year. The negotiation ends when any party of the iron ore demander and any party of the iron ore supplier reach an agreement on the price, and both international iron ore demander and demander accept the price. This negotiation mode is called "first mover follow the trend" mode; And the pricing benchmark is the FOB price, and the increase of iron ore of the same quality is the same everywhere, that is, "FOB price, the same increase".

Under the annual pricing mechanism of the long-term association, the supplier can occupy the market in a balanced way for a long time, and the demander can obtain a stable supply channel. Since the 1990s, with the vigorous development of steel industry in China and other developing countries, the global supply and demand pattern of iron ore has changed dramatically. The growth of ore production cannot meet the rapid expansion of steel production capacity. Raw materials are seriously scarce, and the spot price is far higher than the long-term agreement price, which has become the trigger for the disintegration of the annual pricing mechanism of the long-term agreement.

Out of dissatisfaction with the annual pricing mechanism of the Long term Association, the three major mines seek their own favorable pricing methods. In 2009, after Japan and South Korea steel mills confirmed the "first price" with the three major mines, China reached an agreement with FMG outside the three major mines that the price was slightly lower. The "first price follow the trend" rule was broken, and the annual negotiation of the Iron Ore Association broke down.

In March 2010, Vale took the lead in changing the original annual benchmark pricing to quarterly pricing, and then RIO and BHP reached an agreement with most Asian customers on the basis of CIF price. So far, the annual iron ore pricing mechanism has collapsed and replaced by quarterly pricing mechanism. After only two quarters of quarterly pricing, BHP began to implement monthly pricing. On June 23, 2011, RIO also said that it would give up quarterly pricing and turn to a more flexible iron ore pricing strategy, including quarterly, monthly and even daily pricing. Although the agreement period of the long-term cooperation system is still long, its pricing mechanism is gradually close to the spot.

Trade pricing. Since the products of the three major miners are used as the standard in the negotiation of the Long term Association, and there are many types of iron ores, other iron ore manufacturers often refer to the prices of the three major miners in trade pricing, and make certain adjustments to form the following mechanism:

（1） Benchmark price: In the past, the price was negotiated and determined annually by the three major iron ore producers and major steel customers.

（2） Net Back Pricing: iron ore producers other than the three major miners have low pricing power, and their product pricing is usually determined by referring to the "benchmark price" of typical varieties of the three major miners, and adjusting according to the "use value" difference and freight. This calculation method is also called reverse net price. （3） Utilization value: refers to the price adjustment based on the difference in chemical composition between a product and related benchmark products when pricing products. The cost of iron and steel plants is different due to different chemical compositions of ores, which is adjusted according to iron grade, furnace type, carbon purchase, combustion promoter purchase, dephosphorization cost, energy cost and other factors. In a certain period of time, in order to save negotiation costs, the use value adjustment usually occurs in the form of fixed discount ratio and fixed discount price difference.

（4） Conversion method of pricing unit: the pricing unit commonly used in international trade is US cents/dry ton, which is the dollar value of iron content per ton divided by 100. This unit indicates the different iron content and free water content in different types of ores.

The commonly used pricing unit in China is yuan/ton. The conversion method between the two is as follows: first convert cents/dry ton to yuan/ton at the exchange rate, then multiply the price by the iron content (percentage) of the ore, then divide by one and add the water content. The calculation procedure of converting the price of yuan/ton into cents/dry ton is just the opposite.