Ore imports face careful quality checks
Eight government
departments led by the Ministry of Commerce will jointly investigate the quality
of imported iron ore stored at major Chinese ports, according to a source
familiar with the matter.
Chinese steel mills
and iron ore traders had recently told the government that some of the imported
ore was adulterated and urged more regulation of the iron ore market, amid
soaring prices and surging domestic demand, the source
said.
The
eight departments include the Ministry of Commerce, the National Development and
Reform Commission, the Ministry of Industry and Information Technology and the
Ministry of Transport.
The
other agencies are the General Administration of Quality Supervision, Inspection
and Quarantine, the General Administration of the Customs, China Iron and Steel
Association (CISA) and China Chamber of Commerce of Metals, Minerals &
Chemicals Importers & Exporters, said the source.
Imported iron ore
being unloaded at Tianjin Port on Friday.
However, the source
did not clarify the origins of the iron ore being
investigated.
The
investigation comes as the 2010-11 iron ore negotiations are expected to reach a
consensus on the benchmark price by April 1. It is also against the backdrop of
the ongoing investigation against four Rio Tinto employees who are being probed
for bribery.
Xu
Xiangchun, chief analyst of consulting company Mysteel.com, said steel mills
should ask for compensation if the investigation proves that the imported iron
ore is of low quality.
Spot prices of 62
percent iron ore rose to over $130 per ton including freight after the Spring
Festival, more than double the benchmark prices set in 2009, spurred by the
surging demand.
China is expected to
increase steel supplies by 8.6 percent this year to 621.5 million tons,
according to a report from Mysteel. The nation's $586 billion stimulus spending
has significantly boosted steel demand especially from automobile makers,
home-appliance manufacturers and builders.
Customs figures show
China imported 630 million tons of iron ore in 2009, up 41.6 percent from 2008,
mainly from Australia and Brazil.
The
steel lobby, CISA, has for long wanted to regulate iron ore imports to stabilize
prices.
Luo
Bingsheng, vice-president of CISA, said last month that reducing the number of
licensed importers and promoting the agent system at a unified price for iron
ore would be the primary targets for CISA this year.
Luo
said China must strive for a unified iron ore price for all imports to regulate
the market, and erase the differences between long-term and spot
prices.
Meanwhile, Rio Tinto
said on Tuesday its massive iron ore joint venture with rival BHP Billiton will
likely be delayed due to regulatory constraints
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the front rank of the world in the exporting of mining equipments.
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