Singapore (Platts)--26Feb2013/530 am EST/1030 GMT

China imported 32.42 million mt of iron ore from Australia in January, up 21% year on year, data released Tuesday by the General Administration of Customs showed.

The imports were, however, down 3.7% from December.

Despite weak steel prices, a Singapore-based trader said there was strong demand for Australian iron ore last month as Chinese producers were operating their steel plants at high rates.

"Many Chinese mills are upbeat on stronger steel prices after the Lunar New Year, and they did not even cut their crude steel output during the Lunar New Year holidays," said the trader. "Many buyers had also bought more iron ore to stock ahead of the week-long national day holidays, which explains the hike in Australian iron ore imports in January."

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Australia remained the top supplier of iron ore to China, accounting for 49% of the country's total imports in January, compared with 47% in December.

Iron ore imports from Brazil, the second largest supplier to China, reached 12.91 million mt in January, down 16% year on year and 35% month on month, the data showed.

Trading sources said that Vale tried to sell as many cargoes as possible before the rains set in during the later half of December, and the last spot tender was awarded on December 6 last year.

Vale sold at $156/dry mt CFR China on January 14, a 63.8%-Fe LOBT cargo, after an absence of six weeks from the spot market.

Some other sources, however, said production issues, and not weather-related problems were the main reason for the fall in in Brazilian iron ore imports to China in January.

Meanwhile, imports from India reached 0.56 million mt in January, soaring 100% from the previous month but plummeting 87.5% year on year.

A Shanghai-based trading source attributed the spike in the number of iron ore offers from India and deals done to the rise in 62%-Fe Iron Ore Index prices since early December. China's imports from India have been declining, however, as New Delhi had hiked export duties to 30% from 20% on December 30, 2011.

"We are seeing more Indian cargoes offered and sold in the market when the price for iron ore hovers over $140/dmt," said a Shanghai-based trader.

Platts on February 25 assessed the 62%-Fe Iron Ore Index at $151.50/dmt CFR North China.

Separately, the ban on mining in the states of Karnataka and Goa have also limited availability of Indian iron ore for China.

Mining operations in Karnataka have been banned since August 2011, pending investigations into illegal mining activities. In addition, mining in Goa was banned in September 2012 following a probe being carried out into illegal mining activities.

--Melvin Yeo, melvin_yeo@platts.com
--Edited by Geetha Narayanasamy, geetha_narayanasamy@platts.com

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