China diversified its spot iron ore buying away from India in 2011, largely in favour of South Africa, but failed to reduce its dependence on term purchases from top suppliers Australia and Brazil, customs data showed on Saturday. Chinese planners have said for several years that iron ore supplies from India and elsewhere could help break the dominance of the world's top three iron ore miners, BHP Billiton and Rio Tinto of Australia and Brazil's Vale.
But in 2011, China imported 64 percent of its iron ore from those two countries, unchanged from the year before. Meanwhile, iron ore purchases from India dropped by 24 percent, amid complaints about declining quality. Purchases from South Africa rose 22 percent, helping to offset some of the missing Indian tonnage. India still remains No 3, supplying twice what China gets from South Africa.
Overall iron ore purchases rose by 10.94 percent, as the Chinese steel industry continued to expand output in the face of slowing domestic economic growth. China's diversification strategy has led it to seek iron ore from as far afield as Mauritania and Myanmar. That represents a "massive change" in the market, according to remarks on Monday by Wang Xiaoqi, vice-chairman of the China Iron and Steel Association, which represents China's largest mills.
This year, the top suppliers could become even more important to China if softer prices no longer allow marginal producers to cover their higher production costs. "As long as Chinese demand for iron ore is high, we're going to see more countries selling iron ore into China.
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