China in risky bet to test its power in iron ore markets

Australia, July 28 (Reuters) - Iron ore prices are swinging between optimism and pessimism over the economic outlook in top importer China, but beyond the short-term oscillations a longer-term battle is looming.

China is pressing ahead with a plan to centralise iron ore purchasing, with media reports saying state-owned steel mills are forging a new enterprise to boost their bargaining power.

This isn't the first time that China, which buys about 70% of seaborne iron ore volumes, has tried to gain greater control over the market, which moved from a long-term contract basis to being dominated by spot purchases in a process started in 2008 by former BHP Group (BHP.AX) boss Marius Kloppers.