Iron ore warfare electronic platform full spot era

On February 28th at 4 o'clock in Beijing at an iron ore meeting, globalORE (global iron ore spot trading platform) debuted. Its president, Louis Fel, introduced the advantage of the globalORE trading platform to energy professionals in China's steel industry such as Minmetals, Sinosteel and China Steel Association.

This is the first time globalORE has publicly marketed itself to the Chinese steel industry. For more than a year earlier, they were conducted in a low-key manner. GlobalORE President Louis Fel’s first public appearance in China has attracted many big names to join in, Vale, BHP Billiton, Rio Tinto, FMG, Nippon Steel, ThyssenKrupp, and their competitors: from China Steel Association and People from the Beijing International Mining Rights Exchange (hereinafter referred to as the "Northern Mining Institute").

Louis Fel said that globalORE is basically ready and ready to start immediately. We will also publish our information in the Chinese spot market. Louis Fel abbreviates globalORE as "gO."

Wang Xiaoqi, deputy chairman of the China Iron and Steel Association, said that the Chinese iron ore spot trading platform has been widely responded to by domestic and foreign iron and steel companies, iron ore producers and iron ore traders. We will soon introduce the first transactions.

The appearance of the protagonists means that the iron ore price war, after biding farewell to the long negotiations, is abandoning the current index pricing model, and the era of full spot based on the electronic trading platform is approaching. A new round of global iron ore war began.

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Louis Fel's emphases derive from what glob-alORE has done in China.

Informed sources said that at present, glob-alORE's technical staff has already installed its own iron ore spot trading platform on computers of some small and medium sized steel mills and some ore traders in China, and has already been to these possible first batch of Chinese Users conducted training in business and security.

The person familiar with the matter stated that “Compared with the electronic platform created by the China Steel Association and the Minmetals Chamber of Commerce in the North Mine, globalORE is significantly more fully prepared for market promotion”. Many people have reported that the platform of globalORE is very well-operated and safe. They also try to meet the requirements of users.

GlobalORE does not want to fight for Baosteel and China Steel, which are leaders in China's steel and iron ore trading industry. However, China Steel Association has already issued a ban on its member companies and is not allowed to participate in globalORE's electronic trading platform. The most influential 26 steel mills and traders such as Baosteel, Anshan Iron and Steel, Wuhan Iron and Steel, Shougang, China Steel, Sinochem International and CITIC Metal were formally inaugurated as a member of the Chinese iron ore spot trading platform one month ago.

At the morning of the promotion of globalORE at the Louis Fel iron ore conference in Beijing, the North China Iron and Steel Institute invited major domestic iron ore traders and officials from the Ministry of Industry and Information Technology, including CITIC, China Steel, and Minmetals, to be held at the North Mine. China Iron Ore spot trading platform recommendation meeting. Prior to this, the North Mining Institute, the China Steel Association and the Minmetals Chamber of Commerce once organized special events in Shanghai, Beijing, and Xiamen to promote the Chinese iron ore spot trading platform.

On February 28, Wang Xiaoqi, deputy head of the China Iron and Steel Association, appealed to the North China Iron and Steel Group’s iron ore spot trading platform. “We welcome domestic and foreign steel producers, iron ore producers and traders to join and cooperate.”

It is also understood that the recent mining giants BHP Billiton and Rio Tinto have all promoted globalORE's iron ore spot trading platform in China. Informed sources disclosed to the newspaper that BHP Billiton related persons recently stated in Shanghai that globalORE has received the support of some domestic steel mills and traders.

BHP Billiton is a member of globalORE. GlobalORE is modeled on global-COAL, a global coal electronic trading platform launched in 2001. BHP Billiton, Rio Tinto, Anglo American Resources, Japan Power Development Corporation and other mining and energy companies are the founding members and shareholders of globalCOAL. According to public information, globalCOAL has 122 corporate members, and each year it has approximately 80 million tons of thermal coal trading volume. On this basis, a global coal price index has been formed.

On the 28th of February, Wang Xiaoqi, executive vice president of the China Iron and Steel Association, who had just heard speeches from glob-alORE president Louis Fel, told this newspaper: “We will not consider foreign electronic trading platforms. China is the world’s largest iron ore mine. The big stone consumer countries have also established their own electronic trading platforms, and we will soon formally operate and trade."

Allegedly, the Chinese iron ore spot trading platform based at the North Mines will start its formal trading operation in June this year. However, China Steel Association may be put into trial operation earlier. Beibei has advertised on the official website of its iron ore spot trading platform in China to recruit members. It is worth noting that the deadline for recruitment is March 29, 2012.

Informed sources said that the actual running time of China's iron ore spot trading platform, in addition to looking at the preliminary preparation, I am afraid it depends on the action and preparation of the globalORE.

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After conducting a large number of visits and public relations to Chinese steel companies and traders, Louis Fel already knew where Chinese government authorities were concerned about the iron ore electronic trading platform. He said, “GlobalORE will never be a financial platform, but a platform dedicated to the development of spot iron ore trading. On our platform, there will be no financial products. Glob-alORE itself will not be Play any role on the platform."

Louis Fel's position is exactly the same as that of Wang Xiaoqi, deputy chairman of China Iron and Steel Association. Wang Xiaoqi said that China's iron ore spot trading platform will adhere to the principle of spot trading, and only carry out iron ore spot trading related business, do not develop **, swaps and other financial derivatives business.

According to the plan, globalORE will first introduce the five most common varieties of iron ore for trading. On the globalORE's electronic platform, anonymously, the ore's grade, price, source and other information will be clearly displayed. The only thing that will not show is the true identity of the buyers and sellers of iron ore.

At the beginning of both sides are advocating iron ore spot trading platform, many people in the country are worried that this trading platform will provide financial and other convenient conditions for such financial products. The iron ore speculation is that the Chinese Steel Association and the government authorities are not willing to see. However, the joint metal network analyst Zhang Jiabin said that once the iron ore spot trading platform is launched, iron ore products are not far from financialization.

Both Louis Fel and Wang Xiaoqi claim that the purpose of launching the iron ore spot trading platform is to find more transparent and effective iron ore prices. The former claims that globalORE is committed to finding more reliable market participation prices that are transparent and easy to compare. Only a transparent, popular physical forward market can shape a reliable, trustworthy pricing standard. Wang Xiaoqi said that China is the largest importer of iron ore and the largest spot market for iron ore. The establishment of a Chinese iron ore spot trading platform is conducive to the formation of a trustworthy iron ore price formation mechanism.

Obviously, the emergence of traditional rivals such as BHP Billiton, Rio Tinto and Baosteel, Wuhan Iron and Steel, and China Steel Association, etc., has made the two iron ore spot trading platforms one inside and outside look simple. A person at China Iron and Steel said to this newspaper that the essence of the iron ore spot trading platform is the right to price.

Not only do Chinese mills want to change the current index pricing model in the iron ore market. Lin Yuezhi, the general representative of Nippon Steel in Japan, feels that adopting the iron ore spot trading platform is a very good idea. He said, “With less than 20% of the annual iron ore trade volume being the Platts index adopted as a pricing standard, I am wondering how such a standard could become the basis for the global iron ore valuation.”

Nippon Steel Corporation of Japan is currently the best steel company in Asia. In the past ten years or so, it has provided technical and management experience to Baosteel, Wuhan Iron and Steel and other China's best steel companies through the establishment of a joint venture company. Lin Yuezhi said, “China is the largest iron ore market in the world, so we should have greater right to speak in terms of price discovery.”

All of Nippon Steel’s iron ore comes from foreign imports. After the mine company ended the long-term agreement price three years ago, Nippon Steel’s imported ore was also priced using the Platts Index. Lin Yuezhi thinks that the way the index is priced allows steelmakers to have no room for bargaining.

However, Lin Yuezhi is not concerned about the ongoing battle between the two major iron ore trading platforms, or that he is not concerned about who will win, but whether this new transaction method can be successfully introduced into the market. Because the iron ore spot trading platform is currently only conducted in China, it has nothing to do with Japanese companies.

Lin Yuezhi did not disclose whether the New Japan Railways had also been invited by globalORE and mining companies, but he said that Japanese steel companies are all concerned about the performance of iron ore trading platforms in China. He said, "What does the spot trading platform really look like? It's the most important for mines and steel mills."