China, as the world's largest iron ore importer, is at the crucial stage of talking with major ore suppliers about this year's ore price.

The country, wishing to have more say in this area, is asking its companies to say "no" to further price increases of imported iron ore.

As the next round of international bargaining approaches, the China Chamber of Commerce of Metals Minerals and Chemicals Importers and Exporters (CCCMC) and the China Iron and Steel Industry Association have asked domestic steel companies and iron ore importers not to accept any price hike proposals, the China Business News reported on Friday.

Meanwhile, China's Ministry of Commerce on Thursday suggested Chinese steel and iron companies play a crucial role in deciding the international price of iron ore.

China, the largest steel maker in the world, has been witnessing its iron ore importation rocket for years as its economy keeps growing at an annual rate of almost two digits.

Since the world's iron ore price is usually fixed through international negotiations at the beginning of the year among major ore suppliers and importers, China hopes its increasing demand share will play a vital role in restraining the surging ore price.

"In 2005 China imported the most iron ore in the world, so the Chinese side should have absolute say in this round of iron ore talks," Luo Bingsheng, president of the China Iron and Steel Industry Association was quoted by the China Business News as saying.

Figures show that in 2005, China imported iron ore of 275 million tons, up 32.3 percent year on year and accounting for 43 percent of the world's total ore shipment.

In February 2005, Shanghai Baoshan Iron and Steel Corp., representing major Chinese steel makers, had to accept the 71.5-percent rise in ore prices in talks with two of the world's leading iron ore providers, Hamersley of Australia and Companhia Vale do Rio Doce (CVRD) of Brazil, which lifted up China's steel production cost by some 280 yuan (35 U.S. dollars)per ton and squeezed 30 percent of the domestic industry's profit in the year.

So as to avoid such an incident from recurring, on Feb. 15, 2006, the CCCMC and the China Iron and Steel Industry Association jointly held the first working conference in history on the regulation and coordination of domestic steel companies, asking them not to talk with major foreign suppliers individually or sign long-term agreements at spot prices with them, according to China Business News.

Those breaking the rules will be prohibited from importing iron ore, the newspaper said.

China's demand growth for imported iron ore is expected to slow down in 2006, creating good conditions for the decreasing ore price.

The China Steel and Iron Industry Association expects the country's crude steel output to grow less than 10 percent in 2006, and the growth of China's iron ore import will be controlled to within 25 million tons.

Meanwhile China's imported iron ore stockpile is growing rapidly. Official statistics show that by Feb. 10, 2006, the port stockpile of iron ore totaled some 33 million tons, and the corporate stockpile of iron ore reached about 10 million tons.

Due to the growing stockpile of iron ore in the country, the iron ore price is expected to drop, insiders said.

In 2005 China imported iron ore from 40 countries including Australia, India, Brazil and South Africa.

Source: Xinhua