Chinese iron ore importers on Monday denied they were under pressure to sell their port stocks so that they repay their debts to the country's banks, refuting recent local media reports.
The importers added that the price of the more than 100 million mt of iron ore inventories across the Chinese ports, was unlikely to plunge in the near term because they were not under pressure to sell.
As of April 18, iron ore inventories at the 44 major Chinese ports amounted to 108.05 million mt -- down 150,000 mt from April 11 -- or sufficient for 33 days of steel production across the entire country, according to the latest report on the Dalian Commodity Exchange released last Friday.
China's iron ore port inventories have stayed at a nearly two-year high of 100-110 million mt since the beginning of this year, DCE's data showed.
Market sources, however, admitted that the Chinese banks have been more cautious this year in both issuing letters of credit and raising the loan amounts to steel and iron ore trading houses. But one of them said the banks have not been "sending out the ultimatum to collect debts."
Meanwhile, a Beijing-based iron ore trader pointed out that a few "Chinese steel trading houses went bankrupt in the last few months or bosses ran away, failing to pay off their bank loans, which have led banks to be extra careful.
"But those are individual cases, and we can still survive [despite] this and we are in no rush to sell our port inventories for cash to pay off debts," she added.
Chinese banks have raised the ratio of the deposit for a letter of credit to 30% of the total contract value from 15%, the trader said, which has prompted her company to reduce speculative trading in iron ore.
Other market sources agreed, adding, that state-owned steel mills or trading houses still have a high chance of getting financing but small players may face greater difficulty.
Besides, "March-April so far has been a better period for the Chinese steel market than January-February, and no banks would want to force their customers out of business, thus turning loans into bad debts," an iron ore trader in east China's Shandong province reasoned.
For the balance of the first half of 2014, market sources predicted that China's iron ore prices will range narrowly over $110-120/mt CFR China amid a fairly stable economic environment and steel market. They, however, expect, Q4 2014 supplies from the world's major iron ore miners to put downward pressure on prices.
