Chinese iron ore imports draw breath on bank curbs

China's iron ore imports remain on track to increase around 30 percent this year, but the country's latest credit curbs will put the brakes on new purchases of the raw material, suppliers said on Friday.
They said steel producers would draw on large stockpiles of ore in Chinese ports and reduce spot imports in the second quarter after Beijing froze short-term lending by some banks, its latest attempt to slow breakneck economic growth.
"I don't think that the bubble is being burst, but I think there's a major correction being made, which was required," said the general manager of an iron ore supplier in Hong Kong.
Chinese Premier Wen Jiabao told Reuters this week China was committed to forceful measures to cool economic growth to a target of seven percent from 9.1 percent last year.
Iron ore is used to make the steel required for China's booming construction, automotive and white goods sectors. China produced 61.5 million tonnes of steel in the first quarter, up 26.4 percent from a year earlier, data from the International Iron and Steel Institute showed.
"The fundamentals are still sound, but the Chinese government just wants to send out a very clear message that they are not kidding when they say they want things to cool down," a Singapore-based iron and steel trader said.
China imported 50.7 million tonnes of iron ore in the January-March quarter, compared to 34.2 million tonnes in the same period of 2003, official customs data showed.
"That's going to slow down this quarter, but it will pick up (later in the year). The demand is still there," another trader said.
Analysts and traders have forecast imports will reach more than 190 million tonnes for the whole of 2004, up from 148 million tonnes last year.
Australia is the largest supplier of iron ore to China, shipping 18.1 million tonnes in the January-March quarter from 13.5 million a year ago, the customs data showed.
The main suppliers include the world's top two diversified miners, BHP Billiton and Rio Tinto, and the world's largest iron ore miner, Brazil's Cia Vale do Rio Doce. Most of their sales to China are on a long-term contract basis.