A Chinese industrial group has urged domestic steel companies to stop buying iron ore from the world’s top three miners in protest of an alleged price monopoly, state media said yesterday.
The China Iron and Steel Association (中國鋼鐵工業協會) has asked domestic steel firms and traders not to import iron ore from Australia’s Rio Tinto and BHP Billiton and Brazil’s Vale for two months, the China Net, a government news website said.
China has 75 million tonnes of iron ore reserves and production of the resource by Chinese mines was up by 18 percent year-on-year during the first two months of this year, the report said.
“At present our steel enterprises have ample supplies of iron ore to ensure normal steel production for two months,” the report quoted association head Shan Shanghua (單尚華) as saying.
The association called for the boycott last Friday as the most effective means to fight the “monopolistic behavior” of the three iron ore giants, the report said.
News reports said Asian steelmakers like Japan’s Nippon Steel and South Korea’s Posco have already accepted massive hikes in iron ore prices this year of up to 90 percent.
Agreements by the Asian steelmakers in the iron ore talks have previously served as a benchmark in global negotiations.
China’s Commerce Ministry told reporters last month the state would support domestic steel mills in their thorny iron ore price negotiations even after the Australian government bluntly told Beijing to stay out of the talks.
“As the world’s largest iron ore consumer, the interests of Chinese steel mills should be reflected in the negotiations,” Chinese commerce ministry spokesman Yao Jian (姚堅) told reporters.
Last week, the World Steel Association called for regulators to investigate an “oligopoly” of the iron ore mining industry that inflates prices.
“There is an urgent need, now a very urgent need, for the competition authorities around the world to examine the market for iron ore and the market behavior of the three companies who dominate the business,” said Nicholas Walters, spokesman for the World Steel Association. The 180-member group includes 19 of the top 20 steelmakers and makes up 85 percent of global output.
“There are key regulators involved in this around the world,” Walters said on Friday. “Their ears are very much open.”
The European Commission, meanwhile, said last week it received a letter from Eurofer, representing European steelmakers, on March 30 seeking an investigation into the market.
“The Commission will make use of all relevant information in its possession to examine potential competition issues in the iron ore sector,” said a competition spokesman in Brussels who declined to be identified because of policy.
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