Global Times reported that Australia's fourth largest iron ore miner Atlas Iron Limited became a latest member of China's iron ore trading platform, a signal that the miner is aiming to boost its sales to the world's largest buyer amid weakening demand.
China Beijing International Mining Exchange said in a statement that Atlas' participation takes the number of the platform's members to 177 and will further increase its international influence. Other global miners such as Vale SA, Rio Tinto and BHP Billiton already joined the platform earlier in 2012.
Mr Zhang Jiabin, a senior researcher with steel industry portal umetal.com, told the Global Times Sunday that "Atlas aims to boost its sales in China through various channels, because Chinese demand for iron ore is currently not as high as previous years due to the country's economic slowdown. Meanwhile, a big miner's participation could help the platform increase transaction volumes."
According to the CBMX, since its launch on May 8th 2012, a total of 22 transactions have been completed through the platform, amounting to 2.8 million tonnes or USD 384 million.
Mr Xu Xiangchun information director with mysteel.com, a Shanghai based steel information provider, said that "The transaction volume is lower than market expectations because it takes time for domestic buyers to adjust to the new trading platform, and the Chinese platform also faces competition from its Singapore counterpart GlobalOre."
GlobalOre, initiated by Australian ore miner BHP Billiton, made a debut on May 30th 2012. It attracted Chinese steel mills and traders such as Baosteel and Hunan Valin Steel.
Mr Zhang said that "Large mills such as Baosteel are still holding a wait and see attitude because both trading platforms have operated for a short period of time and need to be improved. Companies are inclined to choose the platform, which is more transparent and can provide better services."
Currently, price indices published by foreign agencies like Platts and the Steel Index are widely used by global iron ore miners.
Mr Xu said that CBMX's platform will play a more important role in helping Chinese buyers gain influence in the global pricing of iron ore, especially when there is an oversupply of iron ore and weak demand from domestic steel mills.
According to figures compiled by the Xinhua News Agency, iron ore inventories in China have increased in the past few months. The country's total inventories at ports stayed at 97.91 million tonnes as of July 9th 2012, up 450,000 tonnes from a week ago.
Mr Zhang said that "The Chinese platform's influence on price-setting will depend on the volume of transactions on it."
Source - Global Times
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