Commerce Ministry Defends Benchmark System
China's Ministry of Commerce has announced that it will launch an investigation into the big three global miners’ monopoly over the iron ore trade while defending the traditional benchmark system of pricing. This follows moves by the big three international mining giants to end the 40-year-old system.
"The commerce ministry's anti-trust bureau is currently studying the issue," ministry spokesman Yao Jian said on Thursday. Mr Jian said the benchmark system offered a transparent, stable and foreseeable trading platform for both the suppliers and buyers and enabled the two sides to control production costs and balance their interests but he warned that China's booming iron ore market would become more rational as it diversified supply channels at home and abroad, said Yao.
He pointed out that the number of countries China was sourcing its iron ore from had risen from 10 to 20 in recent years. Chinese steel mills had reduced their reliance on imports, with the percentage of imports falling between 50 and 60 per cent this year.
Chinese steel mills have yet to agree a 2010 price with miners BHP, Rio Tinto and Vale despite other Asian steel mills having agreed price increases of over 90 per cent and a move from annual to quarterly contracts.
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