China is planning improvements to an iron-ore price index it launched six years ago, looking to better reflect market dynamics in the world’s top consumer of the steelmaking raw material and increase usage by market participants.
China has been pushing for a greater say in pricing iron ore in the global market where buyers and sellers mostly use dollar-denominated index prices from providers such as S&P Global Platts and Metal Bulletin.
The China Iron and Steel Association (CISA) will work to eliminate “non-market factors” and “increase the weight of physical prices” in its iron ore price index, Wang Liqun, vice president of CISA, told an industry conference on Thursday.
CISA, which groups China’s biggest and mostly state-run steel producers, began publishing a weekly iron ore index in 2011 and changed it to daily from 2014.
But it has failed to gain traction as traders, steel mills and miners opted to price cargoes using the Platts and Metal Bulletin price indexes.
In 2013, China launched an iron ore futures contract on the Dalian Commodity Exchange that eventually became the world’s most liquid derivatives market for the commodity.
Price swings in Chinese iron ore futures influence movements in the more established indexes, but that has not boosted use of CISA’s price index in settling physical cargoes.
Wang believes CISA’s index, once transparency is increased and it includes more detailed physical transaction data, will be used more by market participants.
“China should have equal position when setting iron ore price in global trade,” he said.
CISA is planning to seek feedback from miners, traders and mills on changes to the index. Wang gave no details on when any changes would be made or a revamped index would be launched.
Source: ReutersPrevious Next