China will launch its first iron ore trading platform next week in a move that may lead to setting up its own pricing index and possibly exerting more influence over import costs, an official and reports said Friday.The Rizhao International Iron Ore Trade Center will begin providing electronic commercial services for iron ore suppliers and steelmakers on Monday, said Liu Qiang, sales manager of Shandong Huaxin Trading Co., which is heading the project.
The center, a joint venture by Shandong Huaxin and four other local companies involved in bulk commodity dealings, will handle electronic transactions, information exchange, quality inspection, storage, transport, insurance and trade settlement, Liu said.
The center will act as a clearinghouse for information on iron ore trading, Liu said.
"As it gains influence in the long-term, it may have some influence on price negotiations," he said.
Rizhao, a port in eastern China's Shandong province, is one of the country's biggest handlers of iron ore imports.
The trading platform would likely mainly serve China's numerous smaller steelmakers. They buy independently from the biggest mills and do not pay the same benchmark prices the big steelmakers agree to each year in sometimes tortuous negotiations with overseas miners like Brazil's Companhia Vale do Rio Doce SA and global miner Rio Tinto Group.
Meanwhile, the annual negotiations with overseas iron ore suppliers dragged on, according to the government-affiliated China Iron & Steel Association, which vehemently denied reports that Chinese steelmakers had settled for 30 percent to 35 percent price cuts.
"China's steel industry and those of Japan and Korea are facing severe shocks from the global financial crisis," CISA said in a statement posted on its Web site. It said the annual negotiations were continuing on a basis of "mutual interest and long-term stability."
Unlike in previous years, when Shanghai-based Baosteel Group led the talks, this year CISA is handling the negotiations. Analysts say it is seeking at least a 40 percent cut in this year's benchmark prices.
China imported 444 million tons of iron ore in 2008 - half of the volume of all imports worldwide, according to government figures. Imports in January through April surged to 188 million tons, as traders took advantage of lower prices to build up stockpiles.
Iron ore pricing has long been a point of contention between China, the world's biggest steel producer and consumer, and foreign raw materials suppliers.
Such friction intensified in recent years as surging demand due to the booming economy and speculative buying drove prices for iron ore and other commodities higher.
But a slowing in industrial production due to the global economic crisis has raised expectations that Chinese and other steelmakers may win big concessions in this round of talks after yielding to demands for double-digit increases in ore prices in previous years.
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[Source] -- Associated Press researcher Ji Chen contributed to this report.
