China holds up Australian iron ore at ports amidst price row

18 Mar 2008


Mumbai: China, the world's largest buyer of iron ore, has delayed issue of permits to Australian spot iron ore amidst a bitter round of annual contract talks, leaving at least 300,000 tonnes of ore stranded at Chinese ports, traders and shipping officials said.

They said at least three cape-sized cargoes worth of ore had been unloaded but were not allowed to leave the northern port of Xingang in China's Tianjin province.

The iron ore were purchased at around $190 to $198 per tonne, including cost and freight - well above term prices of about $110 to $120 a tonne.

Traders see this as an attempt by the Chinese government and industry to pressure Australian miners Rio Tinto and BHP Billiton, which have sought to raise iron ore prices by the 65-71 per cent.

The China Iron & Steel Association and China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters have warned importers that they would have their licences suspended for buying Australian iron ore on the cash market, reports quoting research group CBI China Co said.

China, however, has not blocked iron ore sales from smaller companies in Australia, according to Perth-based producers.

Rio and BHP are locked in talks to settle annual contract prices with Chinese steelmakers, as Rio sought to get more than the 71-per cent price gain won by rival Cia. Vale do Rio Doce.

Rio, based in London, sold iron ore on the spot market at as much as $190 a tonne in December, more than twice the price of about $85 a tonne it sold under contracts.

It plans to triple iron ore sales in the cash market to 15 million tonnes a year, up from 4.5 million tonnes in 2007.

Around 15 per cent of BHP and Rio's ore sales to China are sold on the spot market in past years, CBI said.

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