Analysts said Tuesday that China's newly launched official iron ore price index is unlikely to be that influential.
The China Iron and Steel Association (CISA) published Monday its first official iron ore price index for the first week in October, aiming to provide a new price reference for domestic steel producers.
"The CISA is known to represent the interests of Chinese steel producers, so it is unqualified to serve as an independent and neutral third party information provider. Plus China has the largest demand for iron ore in the world," Fan Haibin, from the Information Research Department of China Metal Recycling (Holdings) Ltd, told the Global Times.
"So it is hard for domestic players to adopt the new index as an objective reference in real business, especially when negotiating with overseas iron ore giants."
Currently, the Platts Iron Ore Price Index is widely accepted by global iron ore companies in their quarterly pricing system in China's iron ore market.
The new "China Iron Ore Price Index" will be issued on a weekly basis, and is composed of two sub-indices, for the price of domestic iron ore and for imported iron ore.
The CISA said on its website that its data collection for the new index involves more than 90 percent of the market trading in China.
"The purpose of the new index is not to replace the foreign price reference; instead it is to break the monopoly of foreign indices and to push the iron ore pricing to be more transparent and fair," Liu Qiong, an analyst with www.cnchemicals.com, told the Global Times.
For the first week of October, the domestic iron ore price index was unchanged at 455.81 compared with the last week of September, as there were no big deals concluded during the National Day holiday.
The average domestic price of 62 percent dry base concentrate ore stayed constant at 1,172.82 yuan ($184) per ton.
Meanwhile, the imported iron ore index was down slightly by 1.13 to 652.41, with the average CIF (cost, insurance and freight) price of 62 percent dry base fine ore reaching $176.22 per ton, equivalent to 1,310.21 yuan per ton including tax.
Side-bar: Rio Tinto CEO sees little change in China ore imports, despite lower steel demand
Rio Tinto's chief executive said Tuesday he did not foresee a significant change in China's demand for iron ore despite investor concerns about slowing steel demand in the country and weak developed economies.
Index-based spot prices slid to more than six-month troughs Monday, after dropping about 5 percent in September, spurred by signs of slowing Chinese steel demand and uncertainty about the fate of the global economy.
China is the world's biggest buyer of iron ore C a key steelmaking material.
"We continue to see robust business conditions for Rio Tinto products into China, particularly in iron ore. We would not foresee real significant changes in that demand profile in the next few months," CEO Tom Albanese told reporters on the sidelines of the World Knowledge Forum in Seoul. He declined to comment on media reports that a top Chinese nuclear power generator is back in talks to buy Kalahari Minerals, in which Rio holds about an 11 percent stake. Rio also owns 14 percent of Kalahari's major asset, Extract Resources.