China will continue to inspect the import of iron ore in a bid to ensure fair play in the sector, according to China's Ministry of Commerce.

 

The ministry will continue to watch quantity, price and import countries of iron ore imports, said an official with the ministry's foreign trade department. Such measures were adopted earlier this year.

 

Some foreign iron ore suppliers violated the widely accepted international price rules, the official said, by exporting to the Chinese cash market at high prices at the same time they were in negotiations with large Chinese importers for one-year price contracts.

 

The surge in iron ore imports in the past months has resulted in stockpile at Chinese harbors and significant growth in enterprises' stocks.

 

The official said the measures were made to combat the practices of certain foreign companies.

 

The ministry also banned iron ore dealers from providing ore to low-efficiency mills that generate heavy pollution.

 

"The move was made upon the Chinese steelmakers' petition," the official said. "The decision is expected to help promote the healthy development of iron ore trade."

 

Australia's BHP Billiton Ltd, Rio Tinto Group, and Brazil's Companhia Vale do Rio Doce are the three major suppliers of iron ore across the world.

 

The long-term iron ore supply contracts with these suppliers are generally signed before April.

 

However, this year's negotiation will likely extend beyond April as China largest steelmaker Shanghai Baosteel Group Corp, the only representative of Chinese firms in talks with miners, failed to reach a price agreement for 2006 with the three suppliers.

 

The negotiation broke down because of the major disparity of prices that the two sides insisted upon. The Chinese side argued this year's iron ore price should remain stable compared with a year earlier, while the suppliers insisted on an increase.

 

Chinese mills and iron ore traders accepted in 2005 a 71.5 percent rise in iron ore prices, which was set by Japanese companies.

 

Figures from the customs show that in 2005, China imported iron ore of 275 million tons, up 32.3 percent year-on-year and accounting for 43 percent of the world's total ore shipment.

 

There have been rumors in the market that the ministry recently issued a guideline to cap prices of imported iron at US$54 per ton, including cost and freight.

 

However, an official with the ministry denied recently that the ministry issued any price directive on iron ore imports.

 

In 2005, China imported iron ore from 40 countries. Australia and Brazil accounted for over 60 percent of the China's total imports last year.

 

(China Daily March 14, 2006)