Market development brings about a change in Iron ore import licensing system of China. It was announced by the Ministry of Commerce on June 7 that the relevant companies are required to apply for Iron ore license online, from 1st of July, 2013. According to the market sources, this change will prove to be a step towards future reformation.
The announcement spread a rumor in the market saying that the China Iron ore import licensing system will be cancelled in the near future. Whereas, some market insiders interpreted it as the import licensing system will be changed gradually. However, most market insiders consider it to be a matter of time before the licensing system is scrapped.
According to the statistics, around 118 steel mills and trading companies have attained the Iron ore import license at present. It includes some of the largest steel mills like Ansteel, WISCO, Shougang, Baosteel and also some trading companies like Citic Group, China Minmetals etc.
An agent fee of US$0.5-2/MT that covers services like agent and financing, accounts for a large part of whole cost for steel manufacturers that are running at low margins. If the import licensing system is scrapped, revenue for agents of the large-sized steel mills and trading companies who have the license will decrease; while other steel mills and traders who do not have the import license will get the opportunity to find the overseas resource to reduce their cost.
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