SHANGHAI (AP) -- China, the world's biggest steel producer, is pushing to replace the benchmark arrangement dominated by foreign miners and steel mills that long has been used to set prices for the iron ore it imports.
China sought price cuts from miners of up to 40 percent this year following two years of increases totaling more than 100 percent. It boycotted this year's agreement between major suppliers and Japanese and Korean steel mills on a 33 percent cut, instead buying a large share of its iron ore on the spot market.
Having increased its imports of the key material used to make steel, China expects to be in a stronger bargaining position next year as the industry curbs surging production amid a major restructuring, industry officials say.
Whether China will succeed in its quest is uncertain. But officials of the government-affiliated China Iron & Steel Association say China will account for more than 60 percent of the global iron ore trade this year.
The country's investments in iron ore and coal mining overseas likewise will give it more say, Shan Shanghua, head of the association, told a conference Friday in the eastern city of Qingdao.
"China will not blindly follow other countries and regions in determining prices for iron ore," the Web site of financial magazine Caijing cited Shan as saying.
CISA earlier had complained that spot market purchases by steel mills had undermined its negotiating position versus the miners and contributed to a glut of supply. Spot market prices surged in the summer but have since fallen sharply.
China wants to switch to setting benchmarks by the calendar year rather than timing them, as now, to the April 1-March 31 Japanese fiscal year. Prices should be set on a six-month or one-year basis, and China's iron ore imports should be more strictly controlled, Caijing and other reports cited Shan as saying.
"Next year, there obviously will be an oversupply of iron ore, so there should be one price for China," he said.
CISA officials contacted by phone refused comment.
Traditionally, China has bought iron ore from India on the spot market, while imports from major miners BHP Billiton, Rio Tinto and Vale SA of Brazil were subject to the benchmark.
Chinese steel mills began chafing at that system several years ago.
The failure to reach a pricing agreement this year led both sides to trade more through the spot market, and prices surged as demand jumped thanks to a construction boom fed by China's 4 trillion yuan ($586 billion) economic stimulus program. In September, imports hit a record 64.5 million tons, rising 65 percent over a year earlier.
The government recently announced fresh measures to curb China's annual steel production capacity, which at 660 million tons far surpasses its demand for about 500 million tons. Another 58 million tons of capacity is under construction.
Surging steel exports have worsened friction with the United States and other key trading partners, while the glut in supplies of many categories of steel has prompted steel makers to begin slashing prices, sapping their profit margins.
"Now that the government is moving to curb steel output, how much iron ore do you expect them to buy?" said Zhu Liming, an industry analyst at Shanghai Securities.
"Even if the three top miners want to raise the contract price, I don't think companies will care about it because they will just go to the spot market," he said.
Associated Press researcher Ji Chen contributed to this report.
