May 8 -- The first iron ore spot trading platform started trading on Tuesday and companies including steel producers and miners are showing their support for the platform, which can save trading costs in the long term.
Angang Steel will put up to 30 percent of the company's iron ore trading on the platform, said Li Daguang, vice-general manager of Angang Group International Trade Corporation.
However, some foreign miners are taking a wait-and-see attitude.
"It is still too early to predict how much iron ore we will put into the platform for trading," said Luiz Meriz, president of Vale Minerals China. "However, it has created a new way to look at the iron ore prices, which is the key point of the platform and we are very happy to see that."
He said Vale is still selling iron ore to Chinese clients mainly via long-term agreements, but the platform will bring opportunities for Vale to meet new small-scale Chinese steel producers and establish cooperation.
"We believe the new system will bring more transparency because the prices are not created by the platform, but reflect real transactions," he said.
The platform is expected to reach trading volumes of 50 million tons to 100 million tons by the end of this year, which would account for about seven percent to 14 percent of China's annual imports of iron ore, according to Xu Xu, chairman of China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters.
"The trading based on long-term agreements between iron ore sellers and steelmakers is becoming outdated and many traders see ore at spot prices," he said. "So, we need to follow the trend."
He said the opening of the platform will have a positive impact on traders because it can prevent speculation.
In order to create a fair and transparent spot iron ore trading environment and help the country to gain more power over the iron ore pricing, the China Beijing International Mining Exchange launched the online platform together with the China Iron and Steel Association and the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters in January, and has started test runs since then.
According to the China Iron and Steel Association, China imported 686 million tons of iron ore in 2011, up 10.9 percent year-on-year.
The domestic steel industry had a tough year because of rising costs and falling demand. Total crude steel production in China last year was 680 million tons, up 8.6 percent.