Feb. 10 (Bloomberg) -- China has enough iron ore stocks at ports to maintain prices should sanctions by the U.S. and Europe on Iran, the nation’s fifth-largest supplier of the steelmaking ingredient, disrupt shipments, analysts said.
Iran sold 16.6 million metric tons of ore to China last year, accounting for 2.4 percent of China’s imports of the raw material, said Xu Xiangchun, chief analyst with researcher Mysteel.com. Inventories at 30 Chinese ports totaled 10,021 metric tons this week, about 32 percent more than a year earlier, according to data from Mysteel.
The European Union agreed on Jan. 23 to ban oil imports from Iran, the world’s fourth-largest producer, starting July 1 to ratchet up pressure on the nation’s nuclear program. U.S. President Barack Obama signed a bill on Dec. 31 that denies access to the U.S. financial system to any foreign bank that conducts business with the Central Bank of Iran.
"Any disruption in supply from Iran isn’t likely to cause price volatilities because the quantity is too small,” said Xu Guangjian, a Shanghai-based analyst with Umetal.com. “Steelmakers can easily find alternative supplies at ports. The inventories are high.”
Iron ore prices for immediate delivery gained 3.3 percent this year to $142.80 a ton as of yesterday on expectations demand may rise as Chinese construction resumes after the weeklong Chinese New Year holiday that ended Jan. 29. Ore from Australia, Brazil and India account for 79 percent of the port inventories in China, according to Mysteel data.
Wang Zixuan, co-founder and chief executive officer of Docom Industry Co. that buys as much as 900,000 tons of ore from Iran’s state-owned miners a year and sells to China, said a total of $6 million of capital was frozen twice - this year and last year - by the U.S. because of doing business with Iran.
"Some Chinese companies are buying iron ore from Iran using fake contracts to hide the origin of the suppliers,” Wang said. “They are doing a dangerous thing. There’s a high risk of losing money.”