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Steel industry eyes plans to resolve oversupply

By WANG YING in Shanghai | China Daily | Updated: 2013-08-01 03:49

In addressing the supply glut of the steel industry, CISA also called for its member companies, especially large steel mills, to increase their buying volumes on the nation's iron ore trading platform, which would give the mills a bigger say in the world market.

China's first iron ore spot trading platform was officially launched on May 8, 2012, CISA said on Wednesday.

The platform was set up to change a situation in which iron ore pricing was dominated by the three iron ore giants and explore a more open, transparent and fair pricing system.

"In spite of China's large demand for iron ore, Chinese firms still have little say in the pricing mechanism, and the growing influence of the platform is expected to make some change to the status quo," said Zeng Jiesheng, an analyst with, a leading provider of steel market information.

Steel prices have been on a downtrend since February. As of June 30, steel prices were down 6.45 percent from early January and down 14.69 percent from a year earlier.

According to Wang Guoqing, deputy director of the Lange Steel Information Research Center, low steel prices and high production costs are the major causes for steel makers' thinner profit margins.

"Major steelmakers' return on sales was 0.13 percent on average in the first half, and the ratio even swung to negative 0.23 percent in June," Wang said.

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