Iron-ore shipments from Australia’s Port Hedland, the world’s biggest bulk terminal, climbed to a record in May as China’s purchases of the steelmaking raw material reached an all-time high.
Exports totaled 27.9 million metric tons, compared with 26 million tons in April, figures on the Port Hedland Port Authority’s website showed. Shipments to China climbed to 23.3 million tons from 19.3 million tons.
Iron ore dropped into a bear market last month, retreating from a 16-month high in February, on concern slowing growth in China would curb demand in the world’s largest importer. The decline offered a buying opportunity as Chinese mills will need to restock, Morgan Stanley said May 30. The price rallied 4.2 percent yesterday, the most since October.
“Steel production is at a record high in China, so they needed more ore,” Morgan Stanley analyst Joel Crane said from Melbourne today. The seaborne market will be tight for the rest of 2013 and into next year, the bank said May 30.
Steel output in China gained 8.4 percent from a year earlier to 258.2 million tons in 2013’s first four months, according to data from the National Bureau of Statistics. About 54 percent of the additional production has become inventory in warehouses, according to Wang Xiaoqi, vice chairman of the China Iron & Steel Association.
Shipments to China from Port Hedland totaled 95.8 million tons in 2013’s first five months, compared with 74.8 million tons a year earlier, according to the data. Australia is the world’s largest iron-ore shipper and Brazil ranks second.
Lower iron-ore prices may support import volumes, Clarkson Capital Markets wrote in a June 3 note. “With the weaker market sentiment in the Chinese steel industry, the spot price for imported iron ore could drop to a level that would stimulate inventory restocking,” said the unit of the biggest shipbroker.
Ore with 62 percent iron content delivered to the Chinese port of Tianjin was unchanged at $116.60 a dry ton today, according to The Steel Index Ltd. Prices dropped 18 percent in May and touched $110.40, the lowest since October, on May 31.
Inventories at Chinese ports rose for a fifth week as of May 31 to 70.72 million tons, the highest since January, according to Beijing Antaike Information Development Co. They were the lowest since 2009 at 66.26 million tons as of March 8.
BHP Billiton Ltd., the world’s biggest mining company, and Fortescue Metals Group Ltd. are among companies that ship ore through the port, which is about 1,660 kilometers (1,031 miles) northeast by road from Perth, the capital of Western Australia.