In my recent interview I have been invited to comment on this news development
The price increase in iron ore, accepted already by Japanese steelmakers, will eventually impact consumers with a price increase in cars, home appliances and several steel-made products. Whilst I think that China can possibly have some negotiating power a recent report confirms that India, the third largest supplier, wants to limit exports

"The spot price of Indian iron ore (63 per cent Fe) delivered into Northern China - a key bellwether - has surged to US$154-$157 per tonne in late March alongside tight global supplies of higher-quality ore, concern that India may increase its tax on exports and projections indicating reduced Indian iron ore available for export (due to India's own domestic demand). Spot prices from India are now 122 per cent above the current annual contract price for Hamersley Fines from Australia delivered to northern China (US$69.52 per tonne) - pointing to a very large increase in annual contract prices, once negotiations are concluded for the 2010 Fiscal Year (beginning in April). India is the third-largest exporter of iron ore to China after Australia and Brazil, though its exports declined in FY2009. "

With limited supply and increasing demand from China the price is set to continue its rise unless demands (e.g. limited growth in China deteriorates).

The changes in the iron ore pricing system was possibly triggered by the former Rio Tinto executive trial in China.

Once again I think that commodities like iron ore will benefit greatly from an open market pricing - similar to what happens already in other markets like copper and aluminium that are traded daily on public exchanges. While this is not going to be the case with iron ore, the new pricing system, fixed every 3 months and vs. the previous one year lock-in system, will certainly be beneficial to miners that previously, according to Goldman Sachs, have left billions of profit on the table due to the annual contract price fixing that was notably inferior to the spot price.