BEIJING, Mar. 24 -- China has launched an investigation into imported iron ore inventories that have built up at some of its major ports, the China Daily reported on Wednesday.
Citing a source familiar with the issue, the newspaper said investigators were examining the quality of ores imported during the second half of last year, when spot market prices began to make gains for the first time since the global financial crisis, putting mills under pressure to seek cheaper options.
Port stockpiles have stood near 60-70 million tonnes since the second half of 2008, when spot market prices fell below the annual benchmark price.
Traders expected the volumes to decline when spot market prices rose above about $120 per tonne, the price at which much of the ore was bought on a contract basis in 2008.
China imported 628 million tonnes of iron ore last year, up 41.6 percent compared with the previous year, driven by record steel output of 568 million tonnes.
The China Iron and Steel Association, has been campaigning to clean up the murky world of iron ore trading, where a relatively small number of licensed traders -- including the big state-owned steel mills -- buy far more than they need on a contract basis in order to sell at a profit on the domestic spot market.
Four employees of global mining giant Rio Tinto <RIO.AX> are currently being tried in a Shanghai court on charges of accepting kickbacks from local steel mills in exchange for signing favourable iron ore supply deals.
According to industry consultancy Mysteel, port stockpiles last Friday remained at 71.16 million tonnes, even though prices on the spot market have reached about $150 per tonne, a rise of 50 percent since the beginning of Dec. 2009.