China, the world's largest iron ore purchaser, has held talks with with Vale SA, Rio Tinto Group, and BHP Billiton Ltd. in order t set a new pricing system after a large crash in market prices.

Chinese steelmakers have been pushing for new pricing methods. China import prices fell about 16 percent last week, bringing the total to $130 for a metric ton of iron ore. Import prices have dropped 30 percent since the beginning of September. This is the lowest it has been since July 2010 and brings further concerns about the global economy and China's own economic downturn.

We hope to build a new stable, transparent, fair and reasonable pricing mechanism, Zhang Changfu, vice chairman and secretary general of the China Iron and Steel Association, told reporters today in Beijing, according to Bloomberg. We wish to make it more well- organized and healthy.

The decline for immediate delivery has slowed steel demand from builders and automakers. This may be damaging to the Chinese economy. Iron ore prices are also expected to drop even further to $95 a metric ton, the lowest it has in over two years, before rebounding next year, Peter Richardson explained to Bloomberg.

A senior Chinese industry official said on Monday he anticipated further declines in coming weeks.

In my personal opinion, the price of imported iron ore will fall further, because the trends for the whole sector are unlikely to get better and steel mills don't dare to buy ore, said Zhang Changfu, vice-chairman of the China Iron and Steel Association, to Reuters

This downturn in iron ore prices accelerates a push to adjust the pricing methods, explained Tom Albanse, Chief Executive officer of Rio, to analysts last week. Vale, together with Rio and BHP abandoned their 40-year custom of setting annual iron ore prices in 2010 in favor of quarterly contracts. The quarterly contracts are based on a three-month average of spot price indexes for the period ending in a month before the a new quarter begins.

The top three iron ore companies are able to operate at much lower costs other companies across the globe. They have said falling prices will help drive competitors out of the market.

We've finally seen the Australians running their mines at a decent rate in the last few months and that has combined with a slightly slower pace of steel production to send the price down, said commodities analyst Ian Roper to Reuters.

Rising competition and expenses have squeezed Chinese steelmakers profits to 2.53 percent in September and 2.99 percent in the first nine months of 2011. The Shanghai-based Baoshan, a major producer in China, saw profits fall to 51 percent to 1.24 billion yuan in the third quarter.

However, some the analysts predict that by 2013, China may see new mining projects as the global iron ore shortage may come to an end.