the worlds largest iron ore importer, is allowing
companies to import iron ore without requesting import
The policy alteration
came into effect July 1 and is in line with the central
governments resolution to streamline its bureaucratic
any company qualified to do import business is able to import
iron ore into China. Companies can apply online for automatic
iron ore import permits for each cargo, and an import license
is no longer a must," a steel mill source in Hebei province
told AMM sister publication Steel First.
previously had to have qualified importers bring the iron ore
in for them, in return paying agency fees on top of the cost of
the iron ore. Although these agent fees were small compared
with the total value of the cargo, smaller traders still
welcome Chinas move to scrap import licenses.
"It simplifies the
process of importing iron ore and it will cut costs for us,"
according to one trader in Zhejiang province that imports 3
million tonnes of iron ore annually.
The extent to which
companies with large proportions of import agent business will
be affected remains to be seen.
"Some agent fees were
1 yuan (16 cents) per tonne, 0.5 yuan (8 cents) per tonne or
even lower, so it didnt really change much for those who
didnt have licenses or who collect agent fees from
licenses," a steel mill source in Shandong province said.
"What really matters
in iron ore importing was never the license. It was and still
is the abundant cash flow and the ability to control supplies.
That means smaller traders or steel mills will still rely on
big traders for imported iron ore," a trader in Singapore
foreign companies which have subsidiaries in China that are
qualified to do import business can import iron ore," a steel
mill source in Shanghai said. "It might take a while before the
new policy is fully implemented, and we need to see some of
those foreign companies or non-licensed companies get an iron
ore cargo into China to make sure."
Iron ore products
could easily be sold before reaching Chinas shores, so it
is unlikely that big mining concerns would be interested in a
yuan-based iron ore business within China, traders said.
As a result, it is
equally unlikely that the worlds biggest iron ore miners
would turn to building iron ore distribution centers in the
The former iron ore
import licensing system had been running since 2004. It was
introduced by the China Iron and Steel Association, which
wanted to reduce the number of certified importers in an effort
to curb speculative buying of iron ore.
The system also
presented the opportunity to licensed importers to gain a
profit by leasing their licenses.
But Chinas Ministry of Commerce in early June said
that iron ore and alumina importers would be able to submit
import permit applications online starting July 1.
A version of this
article was first published in AMM sister publication Steel