A neutral, third-party platform that is not owned by iron ore buyers or sellers is needed in order to promote a transparent and fair way of pricing, an official at Baoshan Iron & Steel said Thursday.
"The existing iron ore trading platforms are still lacking in transparency and fairness," Zhang Dianbo, assistant president of the Shanghai-listed steelmaker told an industry conference in Dalian.
Zhang referred to the China Beijing International Mining Exchange, or CBMX, and globalORE, which were launched in May, in his presentation.
"Under existing tenders, only sellers know the number of cargoes sold," Zhang told Platts on the sidelines of the conference. "No one else knows the actual number of cargoes sold."
Other market participants have said that large miners usually sold additional cargoes after awarding tenders, but those trades were opaque.
CISA BACKS CBMX PLATFORM
Earlier at the same conference, the China Iron & Steel Association said market participants should make use of the Chinese trading platform CBMX to aid in raising the fairness and transparency of the commodity's pricing.
"We hope that the different parties will actively participate in an open, transparent trading platform, to kickstart the establishment of a fair and reasonable pricing mechanism," CISA Secretary General Zhang Changfu said.
He encouraged members of the association to use CBMX, instead of participating in "non-transparent" tenders conducted by miners. CBMX, was set up May 8, and has 182 registered members at the end of August.
Zhang said that the shift in iron ore pricing in 2010, to being based on spot price indexes -- something his predecessors had rejected -- had meant that a single mill now typically bought ore based on various index quotation periods, including quarterly, monthly, and on a spot basis.
Zhang made no mention of globalORE, which was launched at the end of August, and has also seen use by a segment of the market.
On both platforms, market participants bid and offer iron ore cargoes anonymously, rendering it difficult to verify the identities of counterparties involved in transactions, and their eventual performance.