The China Iron and Steel Association (Cisa) has told the country's first iron ore trading platform that it cannot deal in imported ore and launch any pricing index as annual talks with overseas miners over contract prices remain at a critical stage. The Rizhao International Iron Ore Trade Centre, which formally opened on May 26, was set up to provide electronic commerce services for iron ore suppliers and steelmakers. It has said it would handle electronic transactions, information exchange, quality inspection, storage, transport, insurance and trade settlement and claimed to have set up the country's iron ore price index. Cisa, which conducted an investigation along with government departments, said the establishment of the centre had violated a national steel industry plan that Beijing unveiled early this year. The service the centre planned to provide was outside its 'allowed business scope', the group added. The centre would not be allowed to 'participate in any commercial and trading activities related to iron ore imports' and 'engage in the quotation of imported iron ore prices and the release of the price index', the industry association said. The Rizhao centre must be rectified and renamed, and should make public announcement on media to clarify the issue, it said. The high-profile statement came at a time when Cisa was struggling to reach a decision on whether to accept a 33 per cent cut in this year's iron ore contract prices with global giants Rio Tinto, BHP Billiton and Vale before the June 30 deadline. The association has demanded a 40 to 45 per cent price cut. If the talks break down without an agreement, mainland steelmakers will be forced to buy all their ore requirements from the more volatile spot market. Cisa opposes the formation of an iron ore price index, fearing this would undermine its pricing power with the ore producers and lead to more volatile production costs. The statement further showed Cisa's determination to trim its 'chaotic' imported iron ore market, said Xu Xiangchun, the chief information officer of Beijing Ganglian Maidi e-Commerce. Cisa earlier this year implemented an agent system under which firms with iron ore import licences are barred from speculative trading of ore imports. Under the system, the 112 licensed iron ore importers, including steelmakers and trading firms, will only sell ore at the contract price plus a 3 to 5 per cent agent's fee, or risk losing their licences for violation. Three shareholders of the Rizhao centre are licensed ore traders, but the centre is still at an early stage and now hiring staff and members. So far, the centre did not have any members or taken out any deals, Cisa found in the investigation. The centre did not have any stable iron ore supply channel and storage facilities or any electronic clearing system with banks, the association's statement said.