Shan Shanghua, general secretary of the China Iron and Steel Association (CISA), has stated the three main iron ore giants (BHP Billiton, Rio Tinto and Vale) are cooperating to change the iron ore trade and to push up prices, thereby posing a threat to the normal operation of the iron ore industry. Mr. Shan said that the CISA will develop countermeasures to achieve fair trade.
According to the CISA official, a drastic change took place in the global iron ore trade in the second half of last year, with the main iron ore suppliers increasing their prices on the back of their monopolistic position in the market.
As detailed by Mr. Shan, in H1 2010 the average imported iron ore price (CIF) in China was $111.5/mt, up $35.6/mt or 46.9 percent year on year; in June this year the average import price was $139.85/mt, up $71.72/mt or 105.3 percent. Meanwhile, the quality of iron ore is declining. According to China's General Administration of Quality Supervision, Inspection and Quarantine, in 2009 the qualification rate of imported iron ore was only 51 percent, with the situation worsening in 2010.
The CISA official stated that China should develop its scrap recycling system and should encourage development of domestic iron ore production and guarantee that domestic iron ore accounts for 40 percent or more of the overall iron ore supply in China. At the same time, China should further develop overseas mines, he said. Large steelmakers should lead smaller steelmakers and investors to make joint efforts for the exploration of overseas mines, Mr. Shan declared.