China OKs first non-official iron ore platform

SHANGHAI - China's first non-official physical iron ore trading platform will begin operations on Tuesday, four years after it was shut down, in a further sign that the government is relaxing its tight grip over imports of the raw material.

China, which buys around two-thirds of global seaborne iron ore, already scrapped a decade-old iron ore import licensing system at the start of this month, eliminating middlemen and cutting costs for domestic steel mills.

The moves appear to mark the end of years of attempts by China to strictly regulate the iron ore trade due to worry over its growing dependence on imports, and are in line with efforts by Beijing to reduce government interference in the market.

It will be the third new platform to start in just over a year to help market participants hedge increasingly volatile iron ore prices, although trading on the existing China Beijing International Mining Exchange and Singapore-based globalORE has been fairly light.

The Rizhao platform was first set up by large privately owned traders in 2009, but was closed by the China Iron & Steel Association industry body before it started operation due to concerns that it would introduce speculation and destabilise the "benchmark" mechanism then used to set annual iron ore prices.