July’s slump in Australian iron ore exports to China from the world’s largest export port at Port Hedland has passed without too much comment, so was it a one-off (the size of the fall) or was it something deeper, say Chinese retaliation against Australia?
There are a few people in the iron ore industry wondering if the size of the fall was a hint of Chinese reprisals against Australia much in the way China imposed high tariffs on Australian barley exports.
Australia’s iron ore shipments to China from the hub of Port Hedland fell 17.5% to 38.1 million tonnes in July from the previous month, according to the monthly release from the Pilbara Ports Authority.
What makes the slide in July even more interesting was the fact that China’s imports of iron ore in July surged by nearly a quarter to a record high. July’s iron ore imports jumped to a new high of 112.65 million tonnes as steel mills.
July imports were up 10.8% from 101.68 million tonnes in June and a large 24% above the 91.2 million imported in July 2019. As a result, Chinese imports for the first seven months of the year jumped 11.8% to 659 million tonnes.
Port Hedland is used by three of Australia’s top four iron ore miners: BHP Group, Fortescue Metals Group, and Gina Rinehart’s Roy Hill.
Rio Tinto uses the Cape lambert and Dampier ports. The Pilbara Ports Authority only releases quarterly data for these two facilities as opposed to the monthly releases for the much larger and busier Port Hedland facilities.
There was no apparent reason for the sudden slump – exports in June had hit a record 46.2 million tonnes from Port Hedland to China.
There’s a lot at stake – June’s record tonnage from Port Hedland took the value of Australian exports of iron ore in 2019-20 to more than $100 billion (including exports by Rio and several smaller producers).
Traders reported that there were shortages of some top-grade material – 65% Fe fines from Brazil because of coronavirus infections in some of the mines of Vale, the big Brazilian miner, and exporter.
Australian mines do not produce ore of that quality – more 58% Fe to 64%.
July’s 38.1 million tonnes of exports from Port Hedland were back to the levels seen in May. These exports are set up several months ahead of shipment.
BHP reports its 2019-20 results later on Tuesday – its executives may have more to say then.
Source: Share Cafe