China to launch iron ore trading platform in December
Shanghai. November 25. INTERFAX-CHINA - China will launch a physical iron ore trading platform by the end of December as part of efforts to gain further influence over global pricing of the commodity, state media reported Nov. 24.
The platform will include an iron ore price index based on actual transactions at domestic and foreign ports, said Dong Chaobin, the president of the mineral trading platform China Beijing International Mining Exchange (CBMX).
CBMX is a stakeholder in the project along with state-owned Aluminum Corp. of China (Chinalco) and China Everbright Group, a government-owned investment vehicle.
There are at present three main international iron ore indexes - the Platts Index, the Metal Bulletin (MB) and the Steel Index (TSI) - all of which use an inquiry system to formulate prices, rather than actual transactions, Umetals analyst Xu Guangjian told Interfax.
Last month the China Iron and Steel Association (CISA) started publishing China's first iron ore index, the China Iron Ore Price Index (CIOPI). Like the CBMX exchange, it is based on actual trading prices.
The international indexes do not reveal sources for their data and are generally higher than domestic indexes, Xu noted.
The CIOPI is published on a weekly basis while the new index will be updated daily, tracking the market more closely, said Mysteel analyst Yu Liangui. The platform will need a sufficient number of participants to ensure its success, he added.
Foreign iron ore producers generally favor the Platts Index over Chinese pricing mechanisms, and any significant change here will take time, according to Yu.
Ensuring iron ore supplies and increasing China's influence in global pricing formed a central part of the 12th Five-Year Plan (2011-2015) for the iron and steel industry released earlier this month.
- GD