In an attempt to control fast rising prices and ensure market stability, China has begun creating a centralised platform for all purchases of iron ore, reported Bloomberg.
Citing sources familiar with the matter, Bloomberg said the state-backed buying platform “is part of a broader focus on boosting China’s influence over the price of commodities.” Currently, the cost of the steelmaking material is largely tied to the spot market with producers and steel mills agreeing on long-term contracts based on averages of the spot price. Prior to 2010, it was set collectively through annual price talks with short-term contracts.
This is the latest action taken by the Chinese government to temper the price rally. China’s National Development and Reform Commission and the State Administration for Market Regulation recently warned commodity information agencies to “not fabricate or publish any false price information.” It also said they would crack down on any irregularities that drive up prices.
Iron ore prices have soared this year to more than $US150/tonne from about $US90/t in November.
As the world’s top steel producer, China imports more than 80% of the roughly 1 billion tonnes of iron ore it consumes each year. Its 2021 imports were worth nearly $180 billion.