China Minmetals and four other State-owned companies have joined hands to set up a new international trading center for minerals in the Caofedian Wetlands in Hebei Province.
The center, which will be able to handle transactions of over a hundred million metric tons, will be China's first full-chain mineral trading center. It will also facilitate the world's largest consumer and importer of iron ore in having a bigger say in sectors including iron ore trade.
Guo Wenqing, general manager of China Minmetals Corp, said the center would cover warehousing, ore proportioning, hedging, financing, spot and future goods.
"The project will gradually change the channels and trading patterns for Chinese steel enterprises when importing ore, prompt firms to develop in a green and sustainable manner and influence the competition pattern of the international ore market."
The center will adopt big data analysis to improve port management and provide tailor-made services for clients, according to Guo.
The other shareholders include steel giants HBIS Group, Shougang Group, and shipping conglomerate China COSCO Shipping Group.
China is the world's largest steel producer. Hebei province is home to several large-scale steel plants. Iron ore demand in Tangshan city alone was 240 million tons last year, government data showed.
Mi Pengqi, senior analyst for the ores and steel sector at Beijing-based JLC Network Technology Co, said: "The volume of China's ore and steel futures trading is huge. The center will be China's first full-chain trade center for minerals and give China a greater say in price negotiations."
"From a micro perspective, many small and medium-sized steel companies in China lack the capability of effective ore proportioning. This project will help them reduce costs," Mi said.
"A more optimized allocation of resources will benefit the healthy development of the entire steel industry."
Demand for iron ore looks positive in China, Fortescue Metals CEO Nev Power was quoted as saying by CNBC. Fortescue is the world's fourth largest producer of iron ore.
"Longer-term, China is looking good in terms of economic development, so we see consistent steel demand and therefore consistent demand for iron ore going forward," Power said.