China steel association to release 2011 iron ore index

China steel association to release 2011 iron ore index.

China is expected to release its own iron ore price index after over one year of preparation, a move that will give domestic steelmakers more bargaining chip in their negotiations with global iron ore producers.

The new index will consist of two sub-indices covering domestic and overseas iron ore prices. The domestic index will be based on the prices of iron concentrates per dry metric ton produced from 32 mining areas in 14 provinces, autonomous regions and municipalities, while the imported iron ore index will be an average weighted value using date collected from the member companies of CISA and CCCMC as well as the transaction prices of imported iron ore handled at eight domestic ports.

Indices published by foreign agencies Platts, Metal Bulletin and the Steel Index are widely used by global iron ore giants. They abandoned a decades-old annual pricing mechanism in 2010, and instead adopted quarterly or monthly contract pricing based on indices published by the three agencies. To persuade the three major mining groups, long accustomed to the Platts index, to accept the new pricing system seems to be an arduous task.