CISA launches iron ore price index

The China Iron & Steel Association (CISA), the country's steel lobby, has launched its own iron ore index. Analysts said the index would more accurately reflect the domestic market and give the nation a greater say in global pricing. The "China Iron Ore Prices Index" includes domestic and import ore prices and released weekly, CISA said.

Zhang Changfu, vice-chairman of CISA, said since China is the world's largest iron ore consumer, the country needs a more transparent and fair price index. The domestic component will be based on dry iron ore concentrate from 32 mines in 14 provinces and regions. The import prices will be based on data from eight ports.

Currently, foreign companies such as Platts, the Metal Bulletin (MB) and The Steel Index (TSI) publish iron ore indexes based on the spot market. Platts' index is used on the three major global iron ore producers: Vale SA, Rio Tinto Group and BHP Billiton Ltd.

Analysts said the question is whether China's iron ore indices will be acknowledged both in the domestic and overseas markets.  State-controlled Xinhua News Agency and Chinese consultancy firm Custeel.com already issue indices based on domestic and import prices, but none of these have been accepted by the global miners. Chinese steel mills prefer to use an index that works in their favour. Apart from the three giant miners, there are also other overseas miners who might consider the index from the Chinese side.