On September 20, 2011, China announced the launch of its own iron ore price index, made available on a weekly basis starting in October 2011. The index is said to be an attempt at influencing international prices of iron ore, as China is a major exporter of iron and steel products.
The China Iron and Steel Association (CISA) established the China Iron Ore Prices Index in coordination with the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters and the Metallurgical Miners’ Association of China (MMAC).
One expressed goal for the index was to “break the international monopoly giants” - namely, S & P's index (Platts), Metal Bulletin Iron Ore Index (Metal Bulletin Iron Ore Index) and the Steel Index (TSI). According to one source, China Steel Association Secretary-General Zhang Changfu wished to “objectively reflect the iron ore market conditions, rather than compete for iron ore pricing right to speak.” In addition, the weekly price index would allow steel companies to use fluctuating market prices to their advantage much more easily than a monthly price index would.
China’s steel output accounted for 44.3% of the world’s total in 2010, so an index such as this would have the potential to become a game changer in the iron ore market. Like all things Chinese, the index will be heavily government regulated and in more times than not favor the Chinese. (One article published shortly after the launch argued that because CISA represents the interests of Chinese steel producers, it cannot be a neutral third party information provider.) With that being said, the index still might provide a valuable look into the Chinese markets.
However, we at Majestic Steel Research haven’t been able to find this CISA index anywhere. The strongly promoted “launch” of the index has received little follow-up press, and despite reports that CISA began its trial-run tracking of the index in August, no records of iron ore pricing can be found on CISA’s website, other than a short news briefing on the index launch.
While we're not sure of the reasons behind this elusive index, we'll continue to keep an eye out for it. In the meantime, you can look to Platts, Metal Bulletin and The Steel Index for spot iron ore indexes. Receive a free weekly summary of these indexes and other key indicators driving steel prices by subscribing to the (C)ORE Report.
In case the index is later published, it is composed of two sub-indices: domestically-produced iron ore price index and the iron ore import index. The domestic price index is based upon the prices of iron ore concentrates in 14 provinces in China, including 32 mining areas. The import price index uses pricing data from eight Chinese ports.