Global iron ore prices will decline in the long-

Global iron ore prices will decline in the long-term due to China's economic slowdown and its struggling steel industry , insiders said on Tuesday.

The volume of China's online spot-trading platform for iron ore has been zero for the past four weeks as buyers and sellers sit on the sidelines.

"Traders expect a declining iron ore market, which is hitting volume," said Dong Chaobin, president of the China  Beijing International Mining Exchange, one of the organizers of the platform.

"However, I think that the current iron ore prices are at a reasonable level," he said.

Since its launch on May 8, the trading platform has handled 42 transactions involving 5.29 million metric tons of the raw material, with a total value of $660 million.

On the platform, offers from sellers are three times more than the number of bids from buyers, which indicates a feeble market.

"Due to the global financial crisis and the domestic economic slowdown, China's iron ore consumption has been growing at a slower rate," Dong said. "However, iron ore production has been increasing rapidly driven by capacity expansion."

China's steel companies - the major consumers of iron ore - have been facing lackluster demand since late last year and are reducing production to survive.

During the first nine months, major steel companies produced 439.5 million tons of steel, 9.18 million tons less than at the same period last year, according to figures from the China  Iron and Steel Association released last week.

Wang Xiaoqi, vice-chairman of the association, echoed Dong's view.

Wang said that although iron ore prices might rise slightly in November, the time for dramatic increases is long gone.

Iron ore prices fell to less than $90 a ton in August, their lowest level in three years. Prices rebounded slightly after the central government approved a series of measures to boost infrastructure construction projects to support the economy.

"The recovery of the macro economy takes time. Thus, iron ore prices will not fluctuate dramatically any time soon," Dong said.

Lackluster prices mean an even larger decline of the prices for steel products, which is not good news for steel makers, said Zhu Xi'an, a senior analyst at the industrial consultancy Mysteel.

"International iron ore producers are more concentrated and have better control of their output and capacities," he said. "On the other hand, domestic steel mills are heavily dependent on prices, which puts them in a relatively weak place."

To better serve the traders, Dong said they are making efforts to have more overseas medium and small-scale mines join the platform.

The exchange has received 191 applications to join the platform so far. They came from 148 domestic companies and 43 from abroad.

Meanwhile, to further reflect supply and demand, the platform is working on releasing a benchmark price, which can mirror iron ore prices on the spot market.

"In the past, we had benchmark prices every three days, but only provided them to our members for their decision-making processes," Dong said. "We are considering making those prices public and publishing them daily in the future."

When the trading volume of the platform accounts for more than 5 percent of the total spot trading volume in China, it will publish the transaction prices of the previous day on a daily basis, Dong said.

Officials from the Dalian Commodity Exchange said earlier this month that the  China Securities Regulatory Commission has allowed the exchange to study the establishment of iron ore futures.

The exchange is mulling the listing details for iron ore futures, according to Liu Xingqiang, general manager of the exchange.

Dong said that, as a spot-trading platform for iron ore, the exchange is closely watching the development of iron ore futures and other forms of related derivatives.