An iron ore mining site in Australia Photo: cnsphotos

The backlog of imported iron ore at Chinese ports has hit a five-year high amid sluggish demand as China reins in its massive steel manufacturing sector, and market watchers said it may further reduce iron ore shipments from Australia.

Chinese steel information provider mysteel.com said 199 ships loading around 23.19 million tons of iron ore called at 45 major ports in China as of mid-August, with the backlog climbing to the highest level in the past five years. 

Iron ore from Australia accounted for 61.7 percent of the backlog while shipments from Brazil accounted for 20.2 percent, according to industry portal mysteel.com. 

"The backlog of iron ore remained high in recent months," a staffer at a major port in East China told the Global Times on Monday, blaming new COVID-19 cases that have disrupted transportation. The port handled foreign throughput of 67.7 million tons in the first half of this year.

Steel output curbs have also hurt demand for iron ore, as China vowed to limit its crude steel output this year to no higher than last year's level of 1.065 billion tons. 

"A large number of construction sites have suspended work, leaving shipments of steel to our company diving, due to the coronavirus outbreak in China," an employee who preferred to remain anonymous from Shagang Group Anyang Yongxing Special Steel Co in Central China's Henan Province told the Global Times on Monday. 

"We will reduce our stockpiles of iron ore," the person said, without highlighting the amount. 

In July, China only imported 88.5 million tons of iron ore, down 21.4 percent from the same month last year, when the pandemic halted some factory production and logistics were disrupted. 

According to statistics the Beijing Lange Steel Information Research Center provided to the Global Times, Australia shipped 12.14 million tons of iron ore to China as of August 15, down 1.74 million tons compared with the week earlier. 

The weak demand for iron ore brought its price down, too. The benchmark spot 62 percent iron ore price dived from $235.55 on May 12 to $160.54 on Friday, "as the price reflects market supply and demand," a source with the Anglo-Australian mining company Rio Tinto Group said on Monday.

"China's iron ore imports are likely to continue to drop in the second half of the year," Wang Guoqing, research director at the Beijing Lange Steel Information Research Center, told the Global Times on Monday. 

In July, China's crude steel output was 86.79 million tons, the first year-on-year drop since May 2020. By mid-August, the stock of five major steel in 20 Chinese cities stood at 11.92 million tons, growing 0.1 percent month-on-month and 63.3 percent compared with the beginning of the year, said the China Iron and Steel Association. 

Global Times intern Zhang Xi contributed to the story