- `We’re coming now into their winter,' Fat Prophets Lennox says
- Australian exports may have peaked for moment, Westpac says
Iron ore cargoes from Australia’s Port Hedland to China fell last month to the lowest level since July ahead of a seasonal slowdown in the largest buyer that may compound a decline in production and consumption as the economy cools.
Exports to China were 30.7 million metric tons from 33.8 million tons the previous month and 31.7 million tons a year earlier, according to data from the Pilbara Ports Authority on Wednesday. Overall iron ore shipments totaled 36.5 million tons, down from a record 39.4 million tons in September and 37.5 million tons a year ago.
Iron ore prices dropped last month, breaching $50 a ton, amid concern a global glut may expand. BHP Billiton Ltd. and Fortescue Metals Group Ltd. -- which route cargoes through Port Hedland -- spent billions in recent years on expanding output to lower costs, helping to spur the commodity’s 63 percent plunge since the start of 2014. China’s mills tend to scale back production in November before the winter lull, denting demand for ore just after Asia’s top economy takes a week-long national break in October.
“We’re coming now into their winter, which would seasonally be a slower period for construction activity and the use of steel,” Fat Prophets analyst David Lennox said by phone from Sydney. “One might expect we’d see some seasonal adjustment to iron ore imports over the next few months.”
Ore with 62 percent content delivered to Qingdao fell 0.8 percent to $49.11 a dry ton on Tuesday, the lowest since July 9, data compiled by Metal Bulletin Ltd. show. The raw material bottomed at $44.59 on July 8, a record in daily price data dating back to May 2009. Prices rose 0.1 percent to $49.18 a ton on Wednesday.
“It’s probably due to the week-long national holiday in early October,” said Ralph Leszczynski, head of research in Singapore at Banchero Costa & Co., a Genoa-based shipbroker. “If you look at previous years, September was always a ‘strong’ month, followed by a ‘weak’ October.”
For the year-to-date, shipments are still well ahead of 2014. Exports to China from Port Hedland were 314 million tons in the first 10 months compared with about 284 million tons in the same period in 2014. Billionaire Gina Rinehart’s Roy Hill mine in the ore-rich Pilbara will start exports before the year ends, according to a statement last month.
“The best description for Australia’s iron ore exports is that they have peaked for the moment and are tracking sideways until exports from Roy Hill commence,” Justin Smirk, senior economist at Westpac Banking Corp. in Sydney, said in a note on Wednesday. The bank reiterated a forecast for iron ore to drop to $45 a ton by year-end.