News: RIO UPDATE 1-Rio Tinto willing to help improve iron ore pricing system -China steel body

• Current price mechanism is 'unreasonable' -CISA vice chairman
• Rio says working to ensure 'open, liquid and transparent' market
• China iron ore futures make highest-ever close on Wednesday

(Adds detail in paragraph 3 and Rio Tinto response in paragraphs 7-8; updates dateline, iron ore price)

Miner Rio Tinto (RIO) is willing to work with iron ore consumers to review the pricing mechanism for the steelmaking ingredient, the China Iron & Steel Association (CISA) said, as near-record high prices squeeze margins at Chinese mills.

CISA recently called on regulators in China, the world's top iron ore consumer, to investigate a spike in prices on the Dalian Commodity Exchange DCIOcv1 , saying there were signs speculators had piled in.

In a video call with Rio Tinto on Tuesday, CISA Vice Chairman Luo Tiejun said he had learned that the miner had made continuous "high-price" transactions recently, according to a statement from the association.

He went on to describe the current pricing mechanism as "unreasonable" and "not conducive to the long-term healthy development of upstream and downstream."

"Both suppliers and consumers must study and establish a new pricing mechanism instead," Luo said on the call with Rio Tinto representatives, including Simon Farry, vice president for iron ore sales and marketing at the miner.

Rio Tinto noted strong demand for iron ore and understands the challenges volatile prices pose for end-users, the CISA statement said, adding that the miner was willing to work with the demand side to optimise and improve the mechanism.

A spokesman for Rio Tinto, one of China's biggest iron ore suppliers, said on Wednesday it is continuously working with customers, suppliers and industry stakeholders "to ensure major markets, including iron ore, are open, liquid and transparent."

To this end, Rio Tinto has expanded iron ore sales to China via WeChat and blockchain, some of which were settled in yuan, the spokesman added in an email.

Dalian iron ore prices, which largely follow spot transactions, have gained around 34% in the fourth quarter and on Wednesday finished up 2.9% at 1,008 yuan ($154) a tonne, their highest-ever close.

The price touched a record 1,042 yuan on Dec. 11. ($1 = 6.5405 Chinese yuan renminbi)