The Chinese Iron and Steel Association (CISA) and the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters (CCCMC) lately held a joint meeting under the heading ‘Regulating Domestic Iron Ore Market Order', at which three documents were approved, with the aim of regulating the domestic iron ore market and resisting the three giant iron ore suppliers' demands for quarterly pricing and massive increases. The documents in question are entitled ‘Year 2010 Iron Ore Importer Qualification Standard and Application Process', ‘Implementation Details of Iron Ore Import Agency System' and ‘Registration Regulation about Iron Ore Import Contract and Destination.'
According to ‘Year 2010 Iron Ore Importer Qualification Standard and Application Process', an enterprise should meet all the following requirements before it can apply to import iron ore - Its registration capital should be above RMB 50 million, bank credit rating should reach 2A level, it should be able to obtain credit equal to RMB 400 million from the banks, and its total import amount via customs in 2009 should be above or equal to 1 million mt. In principle, each enterprise has one qualification and 1 (HS) customs code. As to group corporations (with a customs-recorded annual iron ore imports above 10 million mt), an allowance is made. Each group corporation can have 1 qualification and 2 (HS) customs codes.
The document ‘Implementation Details of Iron Ore Import Agency System' regulates the adoption of an agency system for iron ore imports, and states that the principal should apply to Chinese steel industry policy. Agency fees will based on the iron ore FOB price; agency fees of CISA and CCCMC member will be equal or below three percent, while the agency fee for non-member enterprises will be equal or below five percent. Iron ore imported will only be for the buyer's own use, and so imported iron ore will not be allowed to enter the market.
To secure the iron ore import market, the CISA and the CCCMC have established an ‘Import Iron Ore Joint Operations Office' which is in charge of collecting contract information, with the office under the supervision of the Ministry of Commerce. According to the third document, ‘Registration Regulation concerning Iron Ore Import Contract and Destination' every qualified import enterprise is required to report contract information, including amount, quality, origin and destination of imported iron ore to the joint operations office every month.