Iron ore imports by China, the largest buyer, are likely to recover next quarter and break last year’s record as lower prices and depleted stockpiles spur purchases by steel mills, Nippon Yusen K.K. said.

Imports may reach about 55 million metric tons a month in the quarter, from 47 million ton in June and 51 million in July, Kazuo Ogasawara, general manager of the capesize bulker group at Tokyo-based Nippon Yusen, Japan’s largest shipping line, said in an interview in Tokyo.

China, which accounts for half the world’s steel production, is set to break last year’s record for iron ore imports of 628 million tons, Ogasawara said. Contract prices of iron ore will also likely fall more than 10 percent in the three months starting Oct. 1 after a 23 percent gain this quarter, he said.

“Chinese demand for iron ore won’t be weak,” Ogasawara said yesterday.

Benchmark Chinese steel prices gained 9.5 percent in the five weeks to Aug. 20, signaling the market may be improving. Nippon Yusen signed a 10-year contract with Anshan Iron & Steel Group to transport iron ore last quarter, adding to its Chinese customers including Baosteel Group Corp. and Wuhan Iron & Steel Group., Ogasawara said.

Nippon Yusen shares were unchanged at 331 yen as of 2:05 p.m. on the Tokyo Stock Exchange, after earlier falling as much as 1.8 percent.

Chinese Demand

China is forecast to increase iron ore purchases in the long term as the nation’s economic expansion drives steel demand and Chinese mills shift away from domestic ore in favor of higher-quality imports from Australia and Brazil, Ogasawara said.

Nippon Yusen will likely more than double the number of iron ore and coal carriers for the Chinese market within five years from 20 ships now, he said.

China’s five largest mills overtook Tokyo-based Nippon Steel in terms of production last year, displacing it from its slot as the world’s second-largest steelmaker, according to the American Institute for International Steel in McLean, Virginia.

Contract iron ore prices are set to fall for the first time this year after China’s moves to damp property speculation sapped demand for the material. The cash price of iron ore delivered to China yesterday traded at $143.70 a ton, 23 percent lower than this year’s high of $186.5 on April 21.

Vale SA, Rio Tinto Group and BHP Billiton Ltd., the world’s largest iron ore exporters, this year broke a 40-year tradition of setting prices annually by signing quarterly prices.