Hungry for iron ore in China? Go on the Net!

SHANGHAI, Mar 17 (Reuters) Chinese trading companies are surfing a local version of eBay, Alibaba, to scour the world for an increasingly state-controlled resource -- iron ore.

Small steel mills, desperate to find iron ore from Brazil, India, Indonesia or New Zealand, can find it on Alibaba, China's top online business-to-business Web site, which is backed by Yahoo Inc.

Some of the 237 offers available on Friday included photos of a lump of the ore used to make steel.

''We use the Internet as an extension of our services, to let more people know what we have,'' said Sun Gongmin, who handles Internet marketing for Beijing Hero Trade Co. ''We only started posting iron ore late last year. Before that we'd been pretty successful with rugs.

The Chinese steel industry, led by top steel maker Baosteel Group, is trying to marshal a united front in term price negotiations with the world's top three iron ore suppliers.

To prevent a run-up in spot prices, Beijing has tried to crack down on speculative imports. It is pressuring small mills to close and larger ones to merge and upgrade, to create a modern and competitive industry.

''A lot of people have contacted us already, mostly other trading companies helping their clients source a few thousand tonnes here or there. We're basically just the middlemen.'' His firm specialises in rugs, Canadian lumber, Brazilian iron ore, Indonesian coal, scrap copper and American yellow pine sawdust for composite board, according to its posted description.

Most postings require interested parties to contact the seller for negotiations on price, volume and transport. But the Shanghai Huozhiyao Import Export Trade Co. offers Indonesian spot ore at a tonne, illustrated by a photo of a tropical shoreline. Brazilian ore is a tonne.

Spot Indian iron ore in Chinese ports is now valued around to a tonne, traders said. Brazilian ore sold on a term basis is now valued around a tonne, cost and freight.

By contrast, a search for ''iron ore'' on eBay, Alibaba's rival in online sales to consumers, turned up a variety of postcards of old mines, iron coins and toy trains, but very little that can be measured in tonnes.

REUTERS SD PM1641