Compiled by Caijing staff        

(Caijing.com.cn) The semi-official China Iron and Steel Association (CISA) on June 26 warned Rizhao International Iron Ore Trading Center against engaging in speculative activity outside its remit and strongly urged that the center be "renamed and reshuffled".

In a statement on its website, the CISA alleged the center had exceeded its legal scope and issued misleading information about its operations

An inspection team jointly formed by CISA, the Ministry of Commerce and China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters (CCCMC) investigated the trading center between June 17 and 18. The team held talks with general manager Wang Lei, Rizhao's vice mayor Wang Tong and high-level executives representing the center's three major shareholders.

However, the team found the center did not have a single member and had not handled an iron ore deal since it opened.

Earlier Chinese media reports said the center would offer a world-class electronic iron ore trading platform, compile benchmark iron ore prices and provide customers with commodity storage and transportation services.

Bai Wenhui, general manager of Shandong Huaxin Industry & Commerce Company, a major shareholder, also told Caijing earlier that trading would be governed by a Rizhao International Iron Ore Index .

The team found the center had no stable source of iron ore supply, no warehouse, and the online settlement service was not yet up and running.

The CISA statement said that the Rizhao Municipal Government has ordered the center to suspend iron ore imports and trading, despite the fact its three major shareholders, Shandong Wanbao Group, Shandong Huaxin and Rizhao Zhongrui Group, all hold iron ore trading licenses.

Each of the three companies holds a 30 percent stake, with two other companies accounting for the remaining 10 percent. The five shareholders were only responsible for financing and were not involved in managing operations, the center said.

In a June 9 statement, the CISA said such trading centers were not compatible with the central government's steel industry support plan as they promote speculation and destabilize pricing mechanisms.

China is attempting to encourage the consolidation of its steel industry to ensure mills can better regulate supply and prices.

The steel association also requested that the government immediately cancel the approval of further openings of similar operations.

China imported a record 57 million tons of iron ore in April, while May imports rose 37.4 percent year-on-year to 53.5 million tons, according to customs data.
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Full article in Chinese: http://www.caijing.com.cn/2009-06-27/110190175.html