Ironore stockpiles at China's 19 major ports have fallen 15 percent from a record in November after steel makers and traders stopped buying expensive imports, according to an analyst at Umetal Research Center.

Stockpiles have dropped to 62.7 million metric tons from a record 74 million tons, Du Wei, head of iron ore research at the Umetal, said Wednesday.

Bigger mills including Baosteel Group Corp and Magang (Group) Holdings Co are still depleting expensive iron ore stockpiles instead of placing new import orders, Bloomberg News said.

"Smaller steel makers are resuming purchases gradually," said Du. "Imports may rise after a few months when new orders arrive." China's smaller steel makers don't have long-term supply contracts and may start to buy after prices stabilize, Du said.

China still has 220 million tons of ore reserves, including 90 million tons held at ports, 30 million tons with steel makers and 100 million tons held by traders, Li Yizhong, Industry and Information Minister said on December 12, citing data from the China Iron and Steel Association. Clearing the backlog would take until the end of March, he said.

The steel association takes more ports into account, making its total stockpile figure higher than Umetal's data, Du said.

Cash prices of iron ore imported by China rose 3.3 percent this month after gaining 13 percent in November, according to Beijing Antaike Information Development Co. Still, they are down 58 percent this year. China buys most of its spot iron ore from India.

Nanjing Iron & Steel United Co said steel prices have bottomed out and production would recover this month after four months of declines.

Steel makers in China's Tangshan restarted about 40 percent of their idled capacity last month. Tangshan is a city in China's northern province of Hebei, the nation's largest steel-making province with hundreds of small mills.

China's 71 largest steel makers posted a combined loss of 5.8 billion yuan (US$848.4 million) in October, the first time the entire industry has been losing money, according to the China Iron & Steel Association.

(Shanghai Daily December 25, 2008)