China coal import measures unlikely to extend to iron ore: sources

The overriding view was that it would be impossible to restrict imports of Australian iron ore given the country supplies more than 60% of China's iron ore requirements.

China imports about 80% of its total iron ore needs compared with some 20% in the case of coking coal, market sources estimated. China accounts for just a little more than 20% of Australia's total coking coal exports.

Chinese mills expressed concerns that steel margins would come under threat as the price of coking coal and coke would increase if they were obliged to source more domestically.

This would be compounded by efforts to reduce production in Shanxi province, one of China's largest coal production hubs, as a result of coal washing capacity being almost halved this year.

A couple of mills said they were hurriedly trying to source coking coal from domestic producers to make up for the shortfall from the import restrictions.

One mill official said the company mainly sourced coking coal from Shanxi, Shaanxi and Henan provinces. He said the import restrictions on Australian coal had been "around for some time but it seems more serious now."

Several mills agreed that another round of Chinese coke price increases was likely in the near term. This would make iron ore lump even less appealing as it requires coke to break it down for steelmaking purposes.