THE country’s leading steel companies have formed a group to investigate whether “non-market factors” are causing a record surge in iron ore prices and have called on the government to maintain market stability.

Executives from eight steel firms representing 30 percent of China’s steel output, including China Baowu Group, HBIS Group, Jiangsu Shagang Group and Ansteel Group, gathered at the China Iron and Steel Association (CISA) on June 27 in Beijing, according a document with the minutes from the meeting.

A senior official at CISA who attended the meeting confirmed the authenticity of the document, declining to be named.

The companies met to discuss strategies to cope with a rally in imported iron ore prices, which have climbed 69 percent this year, hitting a record Wednesday.

The eight steel mills will create an investigation group, led by Baowu and assisted by the others, to look into the pricing methodology of imported iron ore, to coordinate with futures exchanges to stabilize the market, and to plead with government departments to “sustain market order.”

In the meeting note, the companies and the CISA blamed the price surge on poorly designed methodologies by price reporting agencies publishing physical prices, speculators in the futures market and poor trading mechanisms in the spot market.

“There are some non-market factors behind the price rally. Especially in the recent two months, some steel mills reckoned that there was no obvious contraction between demand and supply,” the meeting note said.

The plan is to report the recent market situation, including concerns regarding imported iron price discovery, to the general office of the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Commerce, and the State Administration of Market Regulation, the minutes of the meeting showed.

Prices for iron ore cargoes with a 62 percent iron content for delivery into China climbed to a record US$126.50 a ton Wednesday, data from consultants Steelhome showed.

Iron ore supply has declined after Brazilian miners cut output for safety checks and a cyclone in Western Australia disrupted shipments from there.

The countries are China’s two biggest iron ore suppliers.

Iron ore futures on the Dalian Commodity Exchange have doubled since the beginning of 2019.(SD-Agencies)