Iron ore exports to China from Australia’s Port Hedland climbed to a record last month, adding to signs that demand for overseas supplies in the world’s biggest user may be improving as local output is displaced.
Shipments from the world’s biggest bulk export terminal to China were 30.6 million metric tons in July from 29.2 million tons in June and 20.4 million tons in July 2013, data on the port authority’s website showed. Total shipments were also at a record at 36.1 million tons from 33.6 million tons in June and 26.6 million tons a year earlier, the data show.
Producers in China are being hurt by lower-cost supplies from BHP Billiton Ltd. and Fortescue Metals Group Ltd. after the Australian miners expanded output and spurred a global glut. Shipments through Port Hedland represented 55 percent of the country’s iron ore exports last year and more than 80 percent of cargoes go to China, port and government data show. Fortescue said last month it completed a $9.2 billion expansion to boost annual output to 155 million tons.
“Supply from lower-cost operations is displacing demand for high-cost Chinese domestic tons and seaborne suppliers,” Graeme Train, a Shanghai-based analyst at Macquarie Group Ltd., said by phone.
Ore with 62 percent iron content delivered to Tianjin climbed 0.4 percent to $95.90 a dry ton yesterday, according to The Steel Index Ltd. The raw material, which dropped 29 percent this year, will average $80 in 2015 from $106 this year, Goldman Sachs Group Inc. estimates.
Inventory at ports in China reached a record 113.7 million tons in July and was at 111.55 million in the week ended August 1, according to Shanghai Steelhome Information Technology Co. Inventories have expanded 29 percent this year.