Bloomberg reported that the congestion of ships awaiting iron ore cargoes in Brazil has increased as steel company buyers seek alternatives to supplies in Australia, where suppliers have delayed setting prices.

According to data compiled by port owner Vale, ships docked or due to enter major ports of Ponta da Madeira, Tubarao and Itaguai rose to 155 today up from 152 a month ago.

Mr Tebar Contente a Rio de Janeiro based representative for Canadian shipping company Fednav International Ltd said that “Fighting by Australian iron ore producers over contract prices has caused a rush on loading Brazilian iron ore.” He added that “There has been a big increase in demand from the Chinese, at a time when freight rates look set to continue at record highs due to high oil prices.”

He further added that unseasonably heavy rains are still the main cause of the queues of ships at Vale’s ports because loadings take longer, a company press official said. Brazil’s rainy season typically lasts from November to the end of April.

Mr Contente said that “We do not believe the situation is critical and Vale is unlikely to close ports to new arriving ships to ease the congestion. Vale has always honored its commitments.”

Vale settled 2008 contracts for annual iron-ore sales with international steelmakers between February and April, gaining price increases of 65% to 86.7% for contracts effective April 1st 2008. Australian rivals Rio Tinto Group and BHP Billiton Ltd have yet to settle on prices with customers.

China Iron & Steel Association released a statement on May 29th 2008 formally denying the rumor that Beijing is to introduce a tougher export tax policy on June 1st 2008 adding that such rumor would destabilize the export and import markets, and threaten the country overall economic health as the country struggles with post-earthquake reconstruction.

The market analysts believe there is little chance to see tax policy change on steel products before fourth quarter, although they have not ruled out the possibility of further move from Beijing within this year, learned by China Securities News.

CISA official said that the government’s efforts to suppress excessive steel export have already taken desirable effect, leading to a substantial decrease of finished steel products and semis export in the first four months of this year.

Mr Zeng Jiesheng senior analyst of Mysteel said that China’s monthly steel products export would stay above 5 million tonnes for May and June and hover over a high level in the third quarter and the steel export would add up to 42 million tonnes in the first three quarters. He said that it is quite clear that the steel export is set to rebound, forcing the central government to go in for tougher tax policy within this year, but that might not happen before the last quarter.

Mr Zeng Jiesheng said “Last year’s tightening efforts have already paid off and received the expected impact. And the authority also realizes that too frequent policy change would have backfire impact on driving up speculative steel export boom”.

Moreover, Beijing would also take into account China’s overall dipping trade surplus growth. And as long as the strong global demand stays here, higher export tax would continue to push up the export price and tonnage and thus, prop up the domestic price

BEIJING (XFN-ASIA) - Moody’s Investors Service has a stable outlook on the ratings of base metal, mining and steel companies in the Asia Pacific over the next 12-18 months, and believes China will continue to be the main driver of global metals and bulk commodities demand.

‘Despite a stagnant US economy, China should continue to act as the engine of demand that underpins the ratings of metals and bulk commodities, with supporting roles from ongoing infrastructural build-outs in countries like India, Brazil, and Russia,’ the Moody’s (nyse: MCO - news - people ) note said.

It added that China’s growth is likely to be slower than in the past.

‘But the combination of production and delivery bottlenecks, tight supply and inventories, higher raw-material costs, and problems with power supplies in certain producing countries will help keep prices well above long-term averages.’

Only 20 days ago we reported that steel imports were set to rise. And that’s not a minute too soon, given that the price of steel has increased by 49-65% since the start of the year! According to Platts, US steel imports in April increased 14.5% over March and were 3.4% higher than in April 2007. Although the steel lobby might have you believe otherwise, steel imports are great for US manufacturers because they provide much needed competition in the marketplace and will help bring some semblance of normalcy back to the market place. Mind you, we aren’t going to see a big price drop off — but we’ve seen the rate of price increases drop heavily between May orders for June deliveries and June orders for July deliveries.

The other piece of news is where the steel is coming from (hint: it’s not from the usual suspects). Canada and Mexico, are the leading sources of steel to the US market. China imports dropped 25.7% from the previous month, according to Platts. Brazil and Ukraine, provided much of the slab volume along with Japan; South Korea also increased their exports to the US. Let’s hope wherever it is coming from, steel buyers will get a little more relief this summer, and not just from the heat!