China Iron and Steel Association (CISA) has repeated its stance against BHP Billiton's proposed takeover of Rio Tinto.
The merger of two iron ore giants, which controlled 40 percent of China's iron ore imports, would have a negative impact on consumers and make it easier to control the market and prices, CISA vice chairman Luo Bingsheng said.
The deal would give the combined company a market share of 38 percent of the global iron ore market and reduce the world's major iron ore suppliers from three to two, according to Luo. The other is Brazil's CVRD, which had a market share of more than 33 percent.
Iron ore prices already increased massively this year, representing a huge increase in raw materials for the country's steel mills.
According to CISA statistics, costs for the country's large and medium-size iron and steel manufacturers rose by more than 250 billion yuan (36.5 U.S. billion dollars), or 57.57 percent, in the first half due to soaring material and fuel prices.
CISA had delivered a report to the Ministry of Commerce (MOC), advising the ministry to reject the deal, Luo said, but no response was received yet.
This was after the country's new anti-monopoly law came into effect on Friday. The law aimed to protect fair competition and prevent risks of monopolistic behavior.
The situation of merger was in line with the second article of the law -- when a merger between two foreign companies could affect domestic market, said MOC economist Mei Xinyu said.
According to earlier reports, BHP Billiton has filed with the MOC the 140 billion U.S. dollar takeover bid for Rio Tinto.