Why Expanded Iron Ore Production Doesn't Mean Lower Prices

(Beijing) -- International banks are increasingly getting involved in the iron ore trade.

The purchasing manager at a Hebei-based steel mill said Fortescue Metals Group (FMG), Australia's third-largest iron ore exporter, is now selling iron ore to banks.

"The specific model is that banks give financing to FMG, which in turn gives banks long-term agreements for a certain volume at below-market prices," the purchasing manager said. "The volumes given to banks aren't that big. Banks have a lot of steel customers and trader customers. They're able to sell several million tons."