China's steel industry has been hit with sharply higher spot prices for iron ore as mills scramble for imports ahead of expected import curbs linked to an inquiry involving spying charges against Rio Tinto, the Anglo-Australian miner.

Steel Business Briefing, the consultancy in Shanghai, said this week's surge in Indian iron ore prices, which have risen by as much as $8 a tonne to almost $90 a tonne, was triggered by supply constraints as Australian miners halt spot shipments to China, while Chinese mills rush to buy amid reports that as many as 20 iron ore import licences will be cancelled.

“Some traders point to congestion at Indian ports for the increase. But most believe the key reason is that Rio and BHP Billiton have stopped putting spot shipments up for bid, with volume falling off since the start of July,” the consultancy wrote. It quoted one Shanghai-based trader as saying: “There's almost nothing coming from Australia at the moment.”