Beijing has banned Chinese trading houses from importing low-quality iron in a move that could, paradoxically, increase the raw material procurement costs of the country's steelmakers, trading sources said yesterday.
The surprising decision comes as the 40-year-old pricing system for iron ore, based on annual prices and lengthy negotiations, crumbles. The system has been replaced by quarterly contracts linked to the spot market, where prices are higher. In most cases, steelmakers will end up paying up to twice as much for the commodity.
China is the world's largest iron ore importer, accounting last year for about 70 per cent of the $200bn-a-year seaborne market, up from 16 per cent a decade ago.
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