BEIJING - The price of imported iron ore remained high in China on Wednesday amid declining supplies from India - the world's third-largest ore exporter - and rising spot steel prices.
Indian ore with 63.5 percent ore content remained at $172 a ton - including shipping - on Wednesday after hitting that six-month peak on Tuesday.
Shanghai rebar futures regained 1.6 percent this week to reach 4,540 yuan ($685) a ton on Wednesday, after falling to a three-week low on concerns that China would raise the interest rate.
October imports from India stood at 2.91 million tons, down 39 percent since September, and 44 percent compared with the same period last year, according to data released by the General Administration of Customs on Monday.
India accounted for 6.4 percent of China's total ore imports in October, down from almost 20 percent in May, before India's southern Karnataka state banned iron ore exports in July in a crackdown on illegal mining.
"India, as an emerging country with strong economic growth, requires adequate iron ore to ensure supplies to its domestic steelmakers. So it will gradually reduce exports of that key steel-making component," said Zhang Lin, a senior analyst with the Lange Steel Research Center in Beijing.
One-fourth of India's iron ore exports came from Karnataka.
The Federation of Indian Mineral Industries (FIMI) predicts that the curbs imposed by Karnataka's government will cut Indian exports by 38 percent to 66 million tons this year.
"The continuing decline in iron ore imports from India will force China to find iron ore in other countries and boost its domestic ore output," Zhang said.
Brazilian iron ore imports rose by 3.3 percent in October to 11.8 million tons, while Australian imports fell 20 percent from September to 20.7 million tons.
The big three suppliers - Vale, BHP and Rio - accounted for 77 percent of total deliveries, down from 80 percent in September, with Iran, Ukraine and Russia picking up the slack.
China's iron ore output is expected to exceed 1.3 billion tons within three to five years, said Zhou Zhongshu, president of China Minmetals Corp, last week in Tianjin.
Domestic iron ore supplies have been rising for the last two years. During the first nine months of 2010, China's iron ore output increased 26 percent year on year to 780 million tons.
Meanwhile, iron ore imports dropped 2.5 percent to 460 million tons during the same period, compared with a jump of 41.6 percent in 2009.