Data from major Chinese ports, including Tianjin, Guangzhou and Shanghai shows that currently the amount of the spot goods of iron ore arriving at the ports are decreasing and ore prices are rising.

The decreasing supply of iron ore has forced companies to step up their reserves of iron ore, pushing ore prices higher. As a result, domestic steel makers have had to raise steel prices due to higher costs.

According to data from Chineseport.cn, by the end of April 17, the iron ore inventory of major Chinese ports was about 68.01 million tons, down 820,000 tons compared with a week ago.

Also, the ships docked at Tianjin ports with iron ore imports from Brazil and Australia declined by about 10 percent compared with March.

The latest data from Mysteel.com showed that in the quoted prices of imported ore on April 17, the prices for iron ore in powdered form at 62 percent iron content imported from Brazil have reached $182 per ton, those from Australia with the same iron content was $180 per ton. Some high quality iron ore prices saw a 30 percent jump.

In addition, the three iron ore giants, Vale, Broken Hill Proprietary Billiton Ltd. (BHP) and Rio Tinto, have tightened their supply to the Chinese market. Analysts believe that through the limited supply, they aim to push forward their new pricing mechanisms and strive for more bargaining power in negotiations.

The three companies previously announced they will shorten long-term agreements for international iron ore prices, signaling the end of the decades-old annual benchmark pricing system.

Under the pressure of the three iron ore firms, domestic steel makers have raised steel prices to deal with higher costs, an insider from Guangzhou Iron & Steel Enterprise Group Co. Ltd said that recently, many steel makers have begun raising steel prices, and the trend is obvious in the second quarter.

Survey results from Mysteel.com also showed that more than half of distributors believe that steel prices will surge further from Monday.