CISA wants China to end spot iron ore trade

China Iron and Steel Association (CISA), the trade body of China's large steel manufacturers, wants Beijing to end the spot iron ore trade as it seriously undermines the annual price negotiations between Chinese steelmakers and the world's three big miners.

CISA, which has taken the lead in the iron ore annual benchmark price-settingn negotiations on behalf of Chinese steel manufacturers with the big global miners being represented by Rio Tinto, wants China to clamp down on licensed importers and traders, whom it blames for undermining China's position in the protracted iron ore negotiations. (See: Global iron ore miners locked in pricing battle with China)

CISA has said that small and medium-sized steelmakers, who are buying iron ore from the spot market responsible for the recent surge in prices of iron ore, which has undermined its position in seeking a 40- to 45-per cent price cut from mining giants Rio Tinto, BHP Billiton and Vale, who control 80 per cent of the global iron ore resources.

Luo Bingsheng, vice chairman of the China Iron and Steel Association urged the Chinese authorities to clamp down on importers and also bring drastic changes by tightening the import regulation of iron ore.

Li Xinchuang, vice president of the China Metallurgical Industry Planning and Research Institute has proposed that Beijing should consolidate the iron ore industry in China by reducing the number of licensed iron ore importing firms from the current 112 to 5 to10 only.

In 2005, nearly 500 business houses, with half of them being trading houses, had licenses to import iron ore, which was subsequently reduced to 112.