GO
Loading...

Australia's Port Hedland Ships 25 Percent More Iron Ore to China in December

Thursday, 3 Jan 2013 | 8:33 PM ET
Iron ore from Fortescue Metals Group Ltd.'s Cloudbreak mine arrives at the receiving facility at the company's Port Hedland operation in the Pilbara region of Western Australia.
Bloomberg | Getty Images
Iron ore from Fortescue Metals Group Ltd.'s Cloudbreak mine arrives at the receiving facility at the company's Port Hedland operation in the Pilbara region of Western Australia.

Iron ore exports to China from Australia's Port Hedland, a bellwether for Chinese industrial activity, surged 25 percent in December from the previous month to a record level, shipping data showed.

The rise coincides with the return of Chinese steel mills to the seaborne iron ore market following a prolonged period of destocking in mid-2012.

It also precedes the Australian and Brazilian cyclone seasons, which run until April and each year cause delays to freighter movements.

(Read More: ArcelorMittal Sells $1 Billion Iron Ore Unit Stake to POSCO)

China imported 20.23 million tonnes via the port in December compared with 16.17 million tonnes the previous month, according to statistics from the Port Hedland Port Authority.

Shipments were also up a hefty 21.6 percent on December 2011, figures showed.

Over the destocking period, iron ore slipped below $80 a tonne as sales dried up and mills lived off their stockpiles.

The fall led to the closure of some of China's own iron ore mines, which supply about half the country's needs and generally require prices of around $120 a tonne to operate above water, setting the stage for the surge in imports once the mills started buying again.

(Read More: India Throws $15 Billion Lifeline to Iron Ore Miners)

Iron ore prices have been rising over the last three months. Spot iron ore prices climbed to a 15-month high of $149.80 a tonne on Thursday.

The rebound in prices is a major boon to Australia as iron ore is the country's single biggest export earner.

Growing Demand

Total iron ore shipments from Port Hedland in December jumped 20 percent to almost 26 million tonnes, also the highest reading on record. Japan took 2.64 million tonnes and South Korea 2.24 million tonnes.

(Read More: Are Australia's Iron Ore Ports Expanding for Nothing?)

BHP Billiton is the port's biggest user, followed by Fortescue Metals Group.

Fortescue last week reinstated expansion work to mine an additional 40 million tonnes of iron ore annually from its deposits near Port Hedland.

Rio Tinto, Australia's largest iron ore producer, expects annual global demand for iron ore to grow by a compound 2.2 percent a year, or 25 percent in total over the next 10 years. Much of that growth will come from China.

"For iron ore this equates to a 450 million tonne increase or around half the 800 million tonnes that was added in the prior 10 years," said Morningstar in a client note.

Rio Tinto does not ship ore from Port Hedland but uses the nearby ports of Cape Lambert and Dampier.

  Price   Change %Change
BLT
---
FMG
---
RIO
---

Contact Materials and Metals

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More