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Chinese steelmakers suspect iron ore suppliers of price fixing

Mining industry / Asia

The skyrocketing price of iron ore in China is abnormal, the PRC Iron and Steel Association said.

Chinese steelmakers suspect iron ore suppliers of price fixing

Major steelmakers in China have asked the country's regulators to check iron ore prices, which rose more than 50% month-on-month amid a global recovery in steel production outstripping raw material supply.

“The current rise in iron ore prices has deviated from supply and demand fundamentals and far exceeded steel mills' expectations, and there are clear signs of capital speculation,” steel producers Baowu, Shagang, Hebei Iron and Steel, Anshan Iron and Steel. Shougang, Valin Iron and Steel and Jianlong Iron and Steel said in a statement released by the China Iron and Steel Industry Association (Cisa).

The most active iron ore futures contract on the Dalian Commodity Exchange (DCE) for the first time since trading in this commodity in October 2013 rose above 1,000 yuan (approximately $ 153) per tonne. At the end of today's afternoon session, the contract fell to 966 yuan a tonne, 7.3 percentage points below its high.

"The iron ore pricing mechanism has failed," the steelmakers said, urging the "State Administration for Market Surveillance and the China Securities Regulatory Commission to take effective measures to intervene early in investigations and take tough measures to address possible violations of laws and rules.

The last time Chinese officials investigated the collusion in the Chinese commodity market last year, having achieved a sharp adjustment in both the exchange and spot prices for ore.

“The rate of decline in ore reserves in China's ports suggests that the market is currently experiencing a shortage of around 80 million tonnes, at $ 50 per tonne above its 'normal' level compared to reserves. Obviously, the price market is in a tougher environment with speculative inflows on the stock exchanges, which will lead to higher prices, but we predict a shortage of shipping at the beginning of next year at only 35 million tons, "- wrote today the American bank Morgan Stanley. </P >

Previously it was reported that the China Iron and Steel Association has demanded an explanation from the Anglo-Australian mining company BHP about the sharp rise in iron ore prices.

“The current price of iron ore has gone abnormal,” said Li Xinchuan, president of the China Institute for Planning and Research of the Metallurgical Industry, who is also deputy head of CISA. “How can it grow so fast in such a short time? This has led to the formation of a huge bubble and seriously threatens our industrial safety, ”he stated.

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