Small iron and steel producers in China have been blamed for the country's failed negotiations last month with major international iron ore suppliers.
The large amounts of iron ore stockpiled at China's ports by small firms prior to the start of the talks had a negative effect on negotiations, Liu Ronghua, a senior research fellow with the Tianma Futures Research Center told Xinhua.
Liu estimated the stockpiles to be between 24 and 40 million tons.
The small firms, which did not join the industry's union led by the country's largest steel producer Baosteel Group, are not able to use such a huge amount of iron ore, he said.
They imported the goods in large quantities prior to the price hike and stored the goods at ports at a low cost.
Liu added that the future is bleak for China's iron and steel market. This was another reason why the negotiations, which began last October, failed.
Baosteel Group, which represented other major Chinese steelmakers at the negotiations, agreed to a 19 percent price hike with Australia's BHP Billiton Ltd on June 20.
Liu said the price surge would mean that China needs to spend an extra 10 billion yuan (US$1.25 billion) this year importing 148 million tons of iron ore.
China has already spent an additional 40 billion yuan on imports as a result of a 71.5 percent price rise in 2005.
China's booming economy, which has grown by about 10 percent a year for the last three years, is dependent on raw materials, including iron ore.
(Xinhua News Agency July 7, 2006)