China's CMRG calls for rational trading of iron ore

Mysteel Global: China's market for iron ore should be further regulated, and speculative trading should be curbed, so that the country's iron ore industry can secure reasonable profits and provide sustainable ore sources to domestic steelmakers, according to China Mineral Resources Group (CMRG), the state-owned company managing domestic mineral resources.

Addressing the expanded board meeting of the China Iron and Steel Association (CISA) at the end of July, CMRG's general manager Guo Bin stressed that Chinese steel producers and traders should purchase iron ore based on their actual demand.

"In the first half of this year, China's iron ore market saw actual demand decline but speculative demand grow," Guo said.

"China's pig iron output in first half (H1) dropped by 3.6% from the same period of last year to 436 million tonnes (mnt), leading to an on-year decrease of some 4% in the iron ore consumption during the same period, while the net imports of iron ore rose by a significant 6.1% on year to 599 mnt," he observed. "The additional imports all turned into traders' port inventories," he added.

Such speculative trading among traders may create chaotic competition in the market and damage the interests of the entire iron ore supply chain, according to Guo. To curb unfair competition and enhance the sustainability of iron ore supply for Chinese steelmakers, CMRG has undertaken several initiatives, Guo told attendees of the CISA meeting.

CMRG has built partnerships with many trading companies, ports, and research institutions to coordinate iron ore trading, he said. Moreover, in March this year the group had established a subsidiary to handle mineral sales and trading business, aiming to improve the efficiency of steelmakers' iron ore purchasing by promoting direct trading between mines and mills.

CMRG is also building the large data platform and online trading platform for iron ore resources and will set up a research institute to develop strategies to ensure the security of iron ore supply in China, Guo said.

Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and BigMint.