Chinese iron ore imports hit a new record high for the third consecutive month in April, showing a rising reliance on imports and undermining efforts by steelmakers to force mining companies to cut prices.
China's iron ore imports rose to a new high of 53.5 million tonnes in April, up 24.2 percent from a year earlier, the Ministry of Transport said in a report on its website citing preliminary statistics in late Tuesday.
The figure may vary from data to be issued by the General Administration of Customs early next week.
Chinese steelmakers have been pushing for a 40 percent price cut in annual negotiations with global mining majors BHP Billiton, Rio Tinto and Vale, citing a steel glut and low demand for ore.
But a slew of data showing record iron ore imports, heavier port inventories and solid domestic steel production recently are providing miners with arguments to limit any price cuts.
"This could make it difficult for the mills to win that 40 percent or so price cut they've been pushing for this year," said James Wilson, a mining analyst for DJ Carmichael & Co in Perth, referring to the record imports for April.
Wilson said part of the reason for the rise in imports could be linked to a drop in domestic production of magnetite-type ore in China, which is more costly to produce and buy than spot market ore ready to use and widely available from importers.
An industry group executive told Reuters on Tuesday that Chinese steel mills led in the negotiations by Baosteel (600019.SS: Quote) and should be able to get a price below the spot market, which would mean a cut of more than 30 percent.
But Sam Walsh, the chief executive of Rio Tinto's iron ore division, has warned that the company may walk away from negotiations with Chinese steelmakers over contract iron prices if an agreement cannot be reached by the end of June, according to some media reports in Australia.
Source: Reuters
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