China is poised once again to cut the number of businesses with permits to deal with iron ore imports to improve co-ordination in the sector.

Since a new system was implemented earlier last year for Chinese steel makers and iron ore trading companies, the number of enterprises qualified to import iron ore from overseas was reduced to 118 from 523 in 2004.

And an unnamed source revealed:"The threshold for an iron ore import permit is likely to be elevated again by the end of this year.

"The industry has been considering this move for a long time because it is believed it will promote co-ordination among enterprises."

The China Chamber of Commerce for Metals, Minerals & Chemicals Importers and Exporters and the China Iron & Steel Association agreed in March last year on qualifications needed by importers, and on application procedures.

Permits for importing iron ore are given only to steel makers and traders with a certain production level or trading volume.

The unnamed source said that the possible reduction in the number of importers again this year was not expected to affect on-going talks between major foreign iron ore mines and Chinese firms over long-term supply contracts.

Shanghai Baosteel Group is leading this year's negotiations with three major suppliers, Australia's BHP Billiton Ltd, Rio Tinto Group and Brazil's Companhia Vale do Rio Doce.

The long-term iron ore price, which in previous years used to be fixed before April, has not yet been settled because in the latest round of talks suppliers are demanding an increase in prices.

After a breakdown in the talks, the price for products from Baosteel increased by around 10 per cent.

Chinese mills and iron ore traders last year accepted a 71.5 per cent rise in iron ore prices, which were set by Japanese companies.

Figures from customs show that in 2005 China imported 275 million tons of iron ore, up 32.3 per cent year-on-year. That accounted for 43 per cent of the world's total ore shipments.

Source: China Daily