"Chinese version" iron ore spot market is released

　 In order to truly reflect the market conditions in China and allow the Chinese to grasp the market dominance, it is inevitable that we must focus on the spot market, because the existent quarterly ore price is almost the same as the spot price.

Following the China Iron Ore Price Index (CIOPI), the Chinese steel industry took another step on the road to seek iron ore pricing power. On January 17, the Beijing International Mining Exchange (hereinafter referred to as the “Northern Mines”) issued a press release on the official website confirming that “the China Iron and Steel Association (hereinafter referred to as “China Steel Association”) and China Minmetals Chemicals Import & Export Chamber of Commerce The launching ceremony of the China Iron Ore Spot Trading Platform co-sponsored by the Beijing International Mining Rights Exchange was held in Beijing."

"China's iron ore trade accounts for 60% of the global trade market, and is currently the world's largest importer of iron ore and spot market." Wang Xiaoqi, deputy chairman of China Iron and Steel Association, said: "Building an iron ore spot trading platform Foreign transactions (such as swap transactions introduced by international investment banks) are more conducive to the formation of a fair, equitable, and transparent iron ore price mechanism and reduce artificial speculation.

Steel Association refused to accept

For the Chinese steel industry, the iron ore spot trading platform is not a strange concept. As early as May of 2009, several companies such as Shandong Wanbao Group and Shandong Huaxin Industry and Trade Co., Ltd. jointly established the “Rizhao International Iron Ore Trading Center”, and they intend to provide iron ore trading and brokerage services to their customers. It also plans to build a Chinese version of the iron ore index sunshine index. However, the trading center was established in less than half a month. CISA toughly called for the “approval department to immediately cancel the approval of such trading centers” because it “interrupts the normal order of the iron ore trading market (speculation of iron ore stone)".

“According to the situation at home and abroad, it appears almost inevitable that China has an iron ore spot trading platform.” Jia Liangqun, chief analyst of “My Steel” Network, told the “International Finance” reporter that, first of all, from the market situation in the past three years The existence of a long-standing and long-term co-existence of “excellent” has long been of limited benefit to Chinese steel companies, and iron ore suppliers are also disdained; secondly, the index pricing method has been repeatedly criticized by China Steel Association. In its view, the Platts iron ore index can not really reflect the market conditions in China, that is, there are some doubts about the fairness. At the same time, although China has also launched its own official index, the miners have not yet explicitly accepted the meaning.

"In the above context, to truly reflect the market conditions in China and allow the Chinese to grasp the market dominance, we must focus on the spot market, because the mere existence of the quarterly ore price is almost the same as the spot price," said Jia Liangqun.

Does not exclude the participation of miners

A market source told reporters that the emergence of the above-mentioned iron ore spot trading platform was not a "rash move." Before the launch, related parties conducted roadshows in Shanghai, Changsha, and Beijing to seek support from all parties. Luo Tiejun, deputy director of the Department of Raw Materials Industry, also said that the iron ore spot trading platform is a new way for the market to explore the iron ore price mechanism."

According to the information held by the reporters, the current three major steel enterprises such as Baosteel, Wuhan Iron and Steel, and Anshan Iron and Steel, and Shougang and Hebei Iron and Steel (000709, stocks) and other companies are all determined to participate in the spot trading platform. According to the media, it is known as the “originating member”. In addition, state-owned iron ore traders Minmetals, Sinosteel, Sinochem International (600500, shares), CITIC Metals, and CNBM also confirmed their participation.

“In the future, we do not rule out the possibility of joining the three major iron ore suppliers.” An industry analyst told the reporter that “taking into account the current situation (mine concentration, China is the most important demand country), for the miners, It does not matter which country the trading platform is opened in, because China does need iron ore, and miners are also willing to sell iron ore."

Wang Xiaoqi, vice president of the China Iron and Steel Association, said: “Welcome the global iron ore traders to join the Chinese iron ore spot trading platform.” Reuters quoted him as saying, “You can participate as an at-large member, and you can participate as a shareholder. But As a shareholder, we require it to have a certain influence, scale and credibility in the industry." However, as of the press release, the three major miners did not disclose their willingness.

Does not involve "financialization"

Interestingly, due to Chinese steel companies "preemptively" and large-scale accession to the "Chinese version" of the iron ore spot trading platform, this may be the same as the date for the preparation of the Global Iron Ore Trading Platform (built by Global Coal Trading Platform) in Singapore. Delayed. In November last year, there was constant news that BHP Billiton was lobbying Chinese steel companies to join the global iron ore trading platform.

It is understood that the largest sponsor of the platform is BHP Billiton. The specific shareholders are 40% of steel plants, 40% of mines, and 20% of traders. However, Chinese mills are concerned about the "financialization" of the platform. "Regardless of how it adapts, how it fits in with the trend, Chinese steel companies have never played international financial groups," a steel producer told reporters.

"This measure can avoid sharp fluctuations in iron ore prices." The analyst said, "This is in line with the original intention of setting up the platform."

However, according to Sheng Zhicheng, deputy secretary-general of the China Logistics and Purchasing Federation’s Steel Logistics Professional Committee, whether the platform can succeed or not, the most important thing is whether it can gradually gain visibility and the final transaction amount. "If there is no transaction volume, then how to avoid "financialization" cannot achieve the imaginary effect."

He Rongliang, an analyst at the China Circulation Productivity Promotion Center, is worried that if the mine source is still from abroad, it is equivalent to the two traders participating in the transaction and the cost is not low. In his opinion, the platform can provide an indication of the demand and supply of domestic ore, which is equivalent to the price signal, but it is difficult to stabilize the market. However, he also stated that if the platform can be professional and in-depth, "at least some of the fluctuations in the CIF caused by market fluctuations such as shipping can be suppressed."