The China Iron and Steel Association will start publishing a weekly iron ore index on Oct. 1 as commodity-pricing services compete to have a bigger say over pricing of the raw material used in steelmaking.
"We are able to collect data from all domestic mines and 35 ports nationwide," Luo Bingsheng, the deputy party secretary of the association, said in an interview in Jinan today. The group, known as CISA, represents China's 77 biggest mills.
Quarterly iron ore prices are typically based on figures derived by deducting freight costs from the three-month average of daily iron ore indexes compiled by Platts, the Steel Index Ltd. and Metal Bulletin with a one-month lag period. Steelmakers, including Baoshan Iron & Steel Co., China's biggest public- traded producer of the alloy, typically use Platts.
"It isn't mandatory for steelmakers to replace other price indicators," Luo said. "But an index launched by the steel association will be well received by its members."
The association's index, which will consist of domestic and import prices, will "more truthfully reflect China's market reality" and "guide orderly imports," Vice Chairman Zhang Changfu said on Aug. 2.
Vale SA (VALE3), Rio Tinto Group and BHP Billiton Ltd. (BHP), the world's three-largest iron ore producers, last year abandoned a 40-year custom of annual pricing in favor of quarterly agreements as spot ore prices surged.
China is the largest global buyer of iron ore.
Prices have almost tripled since November 2008, when the data became available on the Steel Index. The prices, reaching a record $191.90 a metric ton in February, gained 0.6 percent to $179.9 as of yesterday.
Some Chinese media and research companies, including the official Xinhua News Agency, China Business News, www.cnchemicals.com and www.cnchemicals.com, have also started publishing their own iron ore price indexes