BEIJING, March 12 (Xinhua) -- China's major ports have seen their iron ore stockpiles fall to a three-year low due to smaller imports, which analysts believe will help curb the overcapacity problem plaguing China's steelmakers.
As of March 8, combined iron ore inventories at 30 major Chinese ports declined by 2.98 million tonnes from a week ago to 66.54 million tonnes, the lowest level since mid-January 2010, data from mysteel.com, a Chinese Internet portal dedicated to the iron and steel industry, have showed.
Iron ore stocks decreased to 77.75 million tonnes at 34 Chinese ports compared with the previous week, the China Securities Journal reported on Tuesday, citing industry observer umetal.com.
Zhang Jiabin, an analyst at umetal.com, said iron ore imports dwindled due to seasonal weather that affected shipments from Port Hedland in Australia, adding that the world's major iron ore mines, such as those in Brazil, also exported less in February.
The latest Chinese customs data indicates that the country imported 56.42 million tonnes of iron ore last month, a 13.17-percent drop year on year and 9.12 million tonnes short of the amount imported in January.
The average imported price for foreign iron ore dipped 9.86 percent year on year to 124.79 U.S. dollars per tonne.
Lighter iron ore stocks will help stabilize domestic steel prices and reduce the overcapacity of Chinese steel mills, whose profits have been squeezed by high iron ore prices and weakening demand in recent years, analysts said.
China's iron and steel sector has shown signs of thawing. The sector's purchasing managers index (PMI) for Feburary rose to 58.9 percent from 49.3 percent the previous month, indicating expansion and marking a record high since March 2011, the China Federation of Logistics and Purchasing said earlier this month.
The Baoshan Iron & Steel Co., China's biggest steelmaker, raised its April factory gate prices for some major steel products, marking the fifth consecutive month of price hikes.
Orders for Baosteel products used in the auto industry have increased due to a healthier auto sector, leading the company to lift prices to avoid running out of products, according to Ye Liping, an analyst with custeel.com, an information portal operated by the China Iron and Steel Association.
But analysts have also warned that large crude steel output and sluggish downstream demand will only permit Baosteel to play a limited role in leading an industry-wide price increase.
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