Bales of steel wire at a steel wholesale market in Shanghai. The rising price of imported ore has driven Chinese steelmakers to turn to domestic supply. [Photo / Agencies]

BEIJING - Imported iron ore will account for 60 percent of China's ore consumption this year, down 2.4 percent from 2009, the first drop in recent years, thanks to rising domestic ore production, an industry official said.

Domestic ore output increased 24.4 percent year-on-year in the first 10 months, while iron ore imports dropped 2.2 percent over the same period, said Luo Bingsheng, vice-chairman of the steel lobby group, the China Iron and Steel Association (CISA).

Luo said the concentration of China's steel industry grew by 6.3 percent year-on-year in the first 10 months, with the top 10 steelmakers producing 46.6 percent of the country's total crude steel output.

Rising domestic iron ore production has hit some foreign miners and affected the global market, he said.

The big three suppliers, Vale SA, BHP Billiton Ltd and Rio Tinto Group, accounted for 77 percent of total deliveries in October, down from 80 percent in September, with Iran, Ukraine and Russia picking up the slack.

Analysts said the continuing rising price of iron ore imports forced China to find supplies either domestically or by boosting other sources.

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Indian ore with a 63.5 percent ore content remained at $173 to $175 per ton including freight on Monday after hitting that six-month peak in November, according to industry consultancy Mysteel.

Rio Tinto, the world's second-largest iron ore producer, has informed some customers in South Korea and China of first-quarter iron ore contract prices, up 7.6 to 7.7 percent compared with fourth-quarter prices, sources at three steel mills said on Friday.

"The rising price of imported ore is the main factor that drove Chinese steelmakers to turn to domestic supply, pushing up domestic ore output," said Du Wei, a senior analyst from Umetals.com.

China has domestic ore reserves of 62.4 billion tons, but most mines have low iron content, increasing the cost of mining. Rising imported ore prices encouraged Chinese miners to source from the domestic market.

China's iron ore output is expected to exceed 1.3 billion tons within three to five years, Zhou Zhongshu, president of China Minmetals Corp, said earlier at a conference in Tianjin.

India, the world's third-largest ore exporter, which cut iron ore exports in July, also contributed to the declining proportion of ore imports, said Du.

India accounted for 6.4 percent of China's total ore imports in October, down from almost 20 percent in May, before India's southern Karnataka state banned iron ore exports in July in a crackdown on illegal mining.

October imports from India stood at 2.91 million tons, down 39 percent from September, and 44 percent compared with the same period last year, according to data released by the General Administration of Customs last month.