Senior Chinese steel industry officials called on Beijing to consider abolishing spot iron ore trade and sharply reduce the number of licensed importers, which they blame for undermining their position in deadlocked iron ore price talks, Chinese media said.
Luo Bingsheng, vice chairman of the China Iron and Steel Association (CISA), the de facto negotiator in protracted iron ore price talks with global miners, said China must move immediately to tighten regulation of its iron ore importing structure, the Beijing Morning Post reported on Tuesday.
CISA has blamed small and medium-sized steelmakers for propping up spot ore prices, putting CISA, representing mostly big mills, in a difficult position as it seeks larger price cuts than other steelmakers for term supplies.
Li Xinchuang, vice president of the China Metallurgical Industry Planning and Research Institute, proposed that Beijing cut the number of licensed iron ore importers to five to 10 firms, from the current 112, to consolidate the industry, the paper said.
Both officials were speaking at a recent steel industry meeting held by the Ministry of Industry and Information Technology, which oversees the sector.
"We must have a 'Big Bang' to regulate iron ore trade. Otherwise we will continue to suffer heavy losses, the competitive power of steel mills will remain weakened, and the tragedy will persist," Li was quoted as saying.
China, the world's largest steel-making country with an estimated annual capacity of 650 million tonnes, is the sole market that purchases the key blast furnace feedstock via both long-term contracts and spot deals.
There are 112 steelmakers and trading houses licensed to import iron ore into China but traders said thousands of firms have managed to enter the business, spurred by strong demand for ore.
CISA, the de facto negotiator in price talks with miners Vale, Rio Tinto and BHP Billiton, is insisting China deserves a better price than others as the world's top buyer of the steel-making input.
The annual price negotiations between Chinese steelmakers and miners have degenerated this year into an international row, with China alleging that Rio Tinto employees were involved in spying and bribing Chinese officials.
Source: Reuters
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