Bloomberg quoted China’s steelmakers, stalled in iron ore price talks with Rio Tinto Group and BHP Billiton Ltd said producers of the steelmaking material are encouraging speculative trading and wants to control the role of importers.

The China Iron & Steel Association said in a statement issued in Beijing that iron ore producers encourage speculative actions by increasing sales on the spot market, leading to huge stockpiles. The group, which didn’t name the suppliers, called on the government to limit resale profits made by trading companies and stop the sale of ore to obsolete mills.

Mr Luo Bingsheng vice chairman of the association, said at a press conference while answering questions related to the ongoing price talks with Rio Tinto and BHP that “We object to speculative and manipulative actions.”

The association said in a statement that “Iron ore suppliers have distorted the actual supply and demand balance in China. This has severely disrupted talks.”

Mr Luo said without elaborating that talk between the steel association and iron ore producers on contract prices are continuing, and China seeks a win-win solution for both sides.

Mr Luo said under an import system proposed by China steel group, traders would buy ore at contract prices agreed to between steelmakers and iron ore producers. These traders would take a 3% to 5% fee. The group would record the amount of ore purchased by mills and the price paid.

Mr Luo is making the comments as cash market prices in China surged above contract prices offered by Rio, BHP and Vale, the world’s three largest suppliers. Steel output in China jumped to a record in the first half as the government spends CNY 4 trillion to revive economic growth.

(Sourced from Bloomberg)