China, the world's top steel producer, was considering capping iron ore import prices in a new attempt to limit surging imports of the raw material and its run-away spot prices, shipping sources said Wednesday.

The sources also said the Chinese Government would apply an iron ore import license system to cargoes arriving in China after May 1, instead of applying the system on sales contracts signed after the date.

No government officials were available for comment.

"They are definitely going to come back with the license and the price ceilings," said Harry Banga, vice chairman of Asia's biggest commodities group Noble Group Ltd.

"How to put the price ceiling into reality is becoming a bit of a difficult task... (But) China can do it."

Noble is one of the biggest exporters of Indian iron ore into China, which saw a 40.5 percent increase last year in iron ore imports to 208 million tons.

An official from one of China's top shipping companies said some Indian iron ore cargoes sailing to China might face problems because of the import licensing system.

The world's top miners, including BHP Billiton Ltd., Companhia Vale do Rio Doce and Rio Tinto Ltd., won a 71.5 percent price hike for 2005 contracts, effective from April 1.

The huge price increase came against the backdrop of surging demand for the raw materials to feed steel mills worldwide, but particularly in China.

Over the past several months, the Chinese Government made clear that it was unhappy with the price increase and blamed a surge in spot prices for Indian iron ore in the past one year.

Source: Shenzhen Daily/Agencies