Bloomberg reported that China, the world largest iron ore consumer needs to limit supplies of the material sold in the cash market as talks to settle contract prices stalled.

Mr Ma Guoqiang president of Baoshan Steel said the nation should reduce the number of its steelmakers to improve their bargaining powers with iron ore suppliers. Mr Chen Ying Vice President of Baoshan said talks to settle prices with BHP Billiton, Rio Tinto Group and Vale South Africa is ongoing.

The China Iron & Steel Association last month accused mining companies of encouraging speculative prices by increasing iron ore sales on the spot market. The association wants BHP, Rio and Vale to agree to a 35% price cut on annual contracts which it wants as a Chinese benchmark.

Mr Ma said “Fortescue is a new iron ore supplier and its products account for a small portion of Baoshan’s needs He said that state owned Baosteel Group, the parent of Baoshan will continue to follow the lead of the China Iron & Steel Association. Baosteel was previously the main Chinese negotiator for iron ore price talks before the steel association took over for this year contract.”

Mr Ma said Baoshan has enough ore to meet its requirements from long term contracts.