Beijing may cancel the iron ore import licenses of some steel mills and trading companies in an effort to regulate the domestic iron ore market and curb speculative trading, the South China Morning Post reported. There has been speculation that Beijing may let ongoing talks with major ore miners lapse, and that some steel companies may accept a 33% discount on iron ore prices from miner Rio Tinto. A steel executive said the China Iron and Steel Association (CISA) and the Chamber of Commerce of Metals, Minerals, and Chemicals Importers and Exporters (CCMCIE) were examining which companies would be allowed to keep their licenses on the basis of import volumes, financial strength and credibility. At present 112 steel mills and traders are licensed to import iron ore; approximately 20 importers are expected to lose their licenses. According to steel industry executives, about 10% of ore imported under the iron ore contract each year is sold by importers to small mills at a large profit. Under the CISA’s new import scheme, licensed importers would sell iron ore to non-licensed mills at the contract price plus a 3% to 5% agent’s fee. China imported approximately 440 million metric tons of iron ore in 2008, about 50% of which was bought on the spot market.
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