China expects sharp reduction of iron ore imports

China's iron ore imports rose in the first half, but imports dropped recently as stricter regulations on the industry took effect, according to the Ministry of Commerce.
The import of iron ore in the following months should slow down and the growth rate of import price will drop dramatically, due to current supply and demand and new regulations, MOFCOM said.

As part of the new regulations, Chinese authorities started an iron ore importing license system on March 1. Since May 1, only 118 steel producers and iron ore importers were granted licenses, according to MOFCOM.
China imported 130 mm tons iron of ore in the first half year, with growth rate of 34.5 %, dropping 6 % year-on year. The iron ore growth rate dropped 82 %, but the average price of imported iron ore stood at $ 68.2, up 3.2 %, in the first half, MOFCOM said.

Domestic steel makers suffered a 71.5 % increase on import prices from overseas iron ore suppliers. MOFCOM estimates China will import 240 mm tons of iron ore in 2005, which will be 15 % higher year-on-year, but the growth rate will drop 25.5 %.
Additionally, MOFCOM says the growth of steel production will probably slow down in the second half of the year, which should restrain the demand for iron ore. In terms of production, China produced 174 mm tons of iron ore, a 26.5 % growth in the first half year. Domestic output is estimated to be 370 bn tons for 2005, increasing 19 % year-on-year.