Fortescue Metals Group says it is closely watching relations between China and Australia following the detention a week ago of four Rio Tinto staff on suspicion of industrial espionage.
"We are all aware of the sensitivities in China,'' chief executive Andrew Forrest told a teleconference today. "We are watching this situation very closely.''
Executive director Russell Scrimshaw said there was obviously "a difficult circumstances in China at moment''.
"We are watching closely the unfolding events,'' he said.
Both Fortescue executives said the miner's relationships with its Chinese customers remained strong.
Mr Scrimshaw also said while he expected ongoing volatility in iron ore demand from Asian steel mills, he flagged a lift in the short-term.
He said there was "a bit of a sense'' of strengthening in Asian steel making markets, particularly Japan and Korea.
Mr Scrimshaw said Fortescue also had "a healthy backlog of orders'' from Chinese steel mills.
"There has certainly been a strengthening of orders for us,'' he said.
"They (the steel mills) are producing in healthy volumes and most mills are doing reasonably well.
"We still have a healthy order book out over several months ... (and) feel quite positive about the medium term.
"But improvements are going to happen in spikes.''
Mr Scrimshaw said Fortescue was currently exporting ore at the market spot price but would adhere to benchmark prices once these are set after the most protracted negotiations on record.
"If there is a benchmark, we'll adjust to that if and when it occurs,'' he said.
AAP
