Rio Tinto said iron ore prices will fall 13.3% in the fourth quarter, the first decline in three quarters as Chinese demand weakens.

Chief executive Sam Walsh said prices will fall to $127 per ton for the three months starting 1 October in accordance with a mechanism based on the average index price during the previous quarter.

Vale, the world’s biggest iron ore producer, said it would reduce prices by 10% in October, in accordance with its own quarterly pricing mechanism.

Earlier this week, Baoshan Iron and Steel, China’s biggest publicly traded steelmaker, said steel prices are under pressure to fall because of weaker demand.

Rio, BHP Billiton and Brazil’s Vale ended a 40-year tradition of annual benchmark prices in favour of quarterly agreements pegged to spot sale.

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