HANGZHOU, China — China is expected to import as much as 800 million tonnes of iron ore in 2013, up at least 4 percent from this year, due to higher steel output and constrained domestic iron ore supply.

"Production of rebar, wire rod and pipe are expected to maintain a high growth rate next year, while output of steel products used in railway, such as medium and heavy plate, are expected to grow," Chen Kexin, chief analyst at Distribution Productivity Promotion Center of China Commerce, a research institute that monitors product prices for China’s Ministry of Commerce, told AMM sister publication Steel First.

The country produced 602.2 million tonnes of crude steel in the first 10 months of 2012, up 2.1 percent from the same period last year, according to China’s National Bureau of Statistics. Crude steel output is forecast to grow 3 percent this year, Chen said, and could top 4 percent in 2013 to reach 750 million tonnes.

"If the government doesn’t release incentives to boost production, China’s iron ore output is likely to stand at 400 million tonnes of concentrate in 2013, little changed from that in 2012," one source said.

Such incentives could include proposed tax cuts.

Cutting miners’ tax burden is "a must," Xie Sanming, an official at the Operation Monitoring and Coordination Bureau of the Ministry of Industry and Information Technology (MIIT), said.

Iron ore, the price of which is driven by demand and logistics costs, isn’t a strategic resource for China, Xie said, even though the country has abundant reserves that could well support accelerated development boosted by tax incentives.

"Beijing raised value-added taxes on domestic mines in 2009 from 13 percent to 17 percent, and changed the resources tax from 60 percent of the base tax to 80 percent of the base tax," Xie said.

China Iron and Steel Association deputy secretary-general Wang Xiaoqi said MIIT is studying possible tax cuts of 10 to 15 percent.

A version of this article was first published by AMM sister publication Steel First.