(Yicai Global) July 5 -- Baowu Steel Group, China's biggest steelmaker, and a number of other large mills have formed a working group in response to a 40 percent jump in the price of imported iron ore since the start of the year.

The group will study the iron ore market, looking into areas such as supply guarantees and pricing mechanisms, follow up on the current situation and trends, and suggest to government departments ways to maintain the market's stability and smooth operation, the Economic Observer reported.

Because of tighter supply imported iron ore prices soared to almost USD115 a ton at the end of June from nearly USD82 in January, according to industry data.

The government is concerned about the sharp rise and is investigating the reasons, Qu Xiuli, deputy head of the China Iron and Steel Association, said this morning, adding that it will crack down on irregularities such as arbitrary price hikes and pricing monopoly.

The new work group also includes China Ansteel Group, Shougang Group, HBIS Group, Shagang Group, Masteel Group, Valin Group, Shandong Iron & Steel Group and other producers.

Supply tightened in the first half of the year due to a series of incidents that included a dam collapse at an iron ore-mining complex operated by Vale in Brazil, Australian fires and hurricanes, and significant growth in real estate and infrastructure, the steel producers noted.

They also cited non-market factors for the price surge. Some players in the spot and futures markets, exploiting uncertainty following the Vale dam incident and the huge impact of the China-US trade spat, may have speculated wildly, fuelling a further hike in prices, according to the steelmakers.