Chinese companies log on for ore

China's appetite for steel has grown fast

Chinese firms are turning to the internet to find iron ore, as it becomes difficult to get their hands on supplies through more usual channels.

Amid high prices and greater state control over iron ore, the firms are instead clicking on website marketplace Alibaba to find the raw material.

Among 237 offers recently listed on Alibaba were photos of a lump of ore.

China's rapid industrialisation in recent years had put a squeeze on domestic iron ore supplies.

From rugs to iron ore

Beijing Hero Trade is one Chinese trading company that is now offering iron ore - the key ingredient to make steel - among its listings on Alibaba's Chinese site.

"We only started posting iron ore late last year," said Sun Gongmin, who runs internet marketing at the firm.

"Before that we'd been pretty successful with rugs."

As well as iron ore from Brazil, Beijing Hero Trade's pages on Alibaba also list Canadian gas, Indonesian coal, scrap copper and American yellow pine sawdust.

"A lot of people have contacted us already, mostly other trading companies helping their clients source a few thousand tonnes [of iron ore] here or there," added Mr Sun.

Interested parties are largely required to contact the Alibaba seller to discover more information about price, volume and transport of the substance.

Viewers can even "subscribe for the latest iron ore opportunities with Trade Alert!" on the Alibaba site.

The Shanghai Huozhiyao Import Export Trade offers Indonesian spot ore at $67 a tonne, while Brazilian ore was listed at $69 a tonne.

Rocketing prices

Finding iron ore at an affordable price is proving increasingly hard for Chinese companies as the market is dominated by a few players.

Beijing is also trying to crackdown on speculative iron ore imports, and pressuring small firms to close and larger ones to merge and upgrade to create a modern and competitive industry.

China's leading steel company Baosteel is trying to initiate talks with the world's top three iron ore manufacturers to negotiate better prices.

Together Brazil's Companhia Vale do Rio Doce (CVRD), and Anglo Australian firms BHP Billiton and Rio Tinto make up 70% of the world's production.

In 2005, the price of iron ore leapt by 71.5%, the most dramatic increase in half a century, according to one analyst.