Executives from eight steel firms representing 30% of China's steel output, including China Baowu Group, HBIS Group, Jiangsu Shagang Group [JSSGG.UL] 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 that was reviewed by Reuters.
A senior official at CISA who attended the meeting confirmed the authenticity of the document, declining to be named as he is not authorised to talk to the media.
The companies met to discuss strategies to cope with a rally in imported iron ore prices, which have climbed 69% this year, hitting a record on 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 stabilise the market, and to plead to 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 mills and the CISA did not respond to inquiries by Reuters seeking official comment.
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 (NDRC), the Ministry of Industry and Information Technology (MIIT), the Ministry of Commerce, and the State Administration of Market Regulation, the minutes of the meeting showed.
The government agencies did not respond to requests for comments.
Prices for iron ore cargoes with a 62% iron content for delivery into China climbed to a record $126.50 a tonne on Wednesday, data from consultants Steelhome showed.
Iron ore supply has declined after Brazilian miners cut output for safety checks after the disaster at a Vale mine in Brazil in January, when a tailings dam collapsed killing about 300 people, and a cyclone in Western Australia disrupted shipments from there. [SH-CCN-IRNOR62]
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 and reached a record high of 911.5 yuan ($132.59) a tonne on Wednesday. It closed at 829.5 yuan on Friday.
(Graphic: China steel output vs production margins,
(Reporting by Muyu Xu and Shivani Singh; editing by Christian Schmollinger)