Reuters reported that stocks of imported iron ore piled across China's major ports reached an all time high of 100.9 million tonnes as of Friday trumping a previous record set a week ago.

The growing use of iron ore, China's top import commodity by volume as a loan collateral amid tight credit conditions in the country has helped inflate the port inventories. The iron ore inventory at 43 Chinese ports topped the prior peak of 100.25 million tonnes recorded on February 14.

The growing iron ore stocks have curbed the urgency for Chinese steel mills to buy forward cargoes, traders said, cutting short a recovery in spot prices from last week's 7% month lows. Iron ore for immediate delivery to China .IO62-CNI=SI dropped 0.8% to USD 122.90 per tonne falling for a second day.

An iron ore trader in Shanghai said that "I think we will see a continued buildup of iron ore stocks unless the Chinese government changes its policy on credit. China's key money rates dropped to 4 month lows this week and traders said the government may be loosening liquidity ahead of an annual parliament session in early March.”

The fall came after a weak manufacturing survey earlier this week, which showed factory activity shrinking for a second straight month in February, that may prompt China's central bank to relax a clampdown on excessive credit growth that it launched in mid 2013.

China, which buys around two thirds of the world's iron ore, imported a record 86.8 million tonnes of the steelmaking raw material in January, surpassing a previous record that was set only two months earlier.