China iron ore imports slow ahead of price leap

Iron ore shipments to China, the world's top steel producer, have slowed in the past few weeks as ports are overwhelmed by large stocks of the raw material accumulated ahead of a giant leap in prices from next month. While China's booming steel sector would ensure strong demand for iron ore - imports of which jumped 40 percent last year - industry officials said on Wednesday buyers were concerned about higher prices and new tax restrictions on steel exports.
Top miners CVRD and Rio Tinto bagged a 71.5 percent increase in iron ore contract prices for sales to Asia's major steel mills this year, as China prepares to suck in more than one-third of the world's seaborne ore.
"In April, the new prices will take effect. There is a lot of iron ore now at all major ports," said an industry official in Hong Kong.
From April 1, China will cut or abolish export tax rebates for some low-end steel products, shipments of which have boomed since mid-2004, the traders and industry officials said.
The move is aimed at curbing iron ore and power usage in the world's top steel market, which churned out 273 million tonnes of steel last year, up 23 percent.
A Beijing-based iron ore trader with an international firm said some small traders and steel mills had faced difficulties getting import licences since the government tightened controls from the beginning of March.
Though major mills and traders were not affected by the licensing system, officials said it was hard to gauge the overall effect on the sector, as China had up to 800 steel mills, some of them very small.
An official at a large shipping company in Tokyo said the slowdown in imports was temporary, as Chinese ports were trying to restrict imports until their stocks were reduced.
"In China, port congestion is heavy. It takes more than a week to discharge wherever you go," he said. "They are trying to limit imports one way or the other, as low-quality iron ore has piled up."
Many traders said they expected imports to pick up again in April or May when ports were cleared, but added there were no signs this was happening - especially as spot cargoes from India were being offered at $95 to $96 a tonne, including freight.