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Iron ore exports dip as price rebounds

IRON-ORE exports leaving Australia’s largest bulk-commodity port declined last month on weaker shipments to not only China, but other key buyers such as Japan.

The iron-ore price, meanwhile, has pushed back above $US96 a tonne and hit its highest point in more than a month on the back of upbeat manufacturing data out of China this week.

A total of 33.6 million tonnes of the steelmaking ingredient was shipped through Port Hedland in Australia’s northwest in June, down 6.8 per cent from 36.1 million tonnes a month earlier.

A 720,000-tonne, or 2.4 per cent, drop in exports to steel-hungry China helped underpin the slide. China still bought more than 29 million tonnes of the ore shipped from Port Hedland.

The world’s second-largest economy accounts for around 60 per cent of global demand for iron ore, used to create steel for industries like manufacturing and construction.

Iron-ore demand has eased, though, as Chinese steelmakers draw down existing inventories after hitting record crude steel output rates in recent months, analysts say.

Traders have also speculated Chinese imports of the raw material may fall amid an alleged financing scandal, as banks withhold credit and customs officials tighten checks on incoming shipments.

There were fewer cargoes last month destined for Japan and South Korea as well. Shipments to Japan fell to 1.4 million tonnes from nearly 2.5 million tonnes, while exports to South Korea dropped to 2.2 million from nearly 3 million the month prior.

Mining companies such as BHP Billiton, Fortescue Metals Group and Atlas Iron use Port Hedland, making it one of the world’s largest iron-ore export terminals.

Iron-ore traffic through Port Hedland has risen sharply in recent years as mining companies have raised output at Pilbara.

Compared with year-earlier volumes, exports via the port in June were up 21 per cent, with shipments destined for China 27 per cent higher.

Benchmark iron ore for immediate delivery to the port of Tianjin in China is trading at $US96.5 a tonne, up from $US94.70 in the previous session.

The commodity price is now at its highest point since May 29 when it traded at $US96.80.

The resurgence comes after the iron ore price dropped to as low as $US89 a tonne last month. So far this year it has lost more than 30 per cent.

Earlier this week, China’s manufacturing sector showed signs of life in June, with two separate pieces of economic data showing activity rising in the month.

Official data showed activity in China’s manufacturing sector expanded in June to its highest point so far in 2014.

Meanwhile, the HSBC China manufacturing purchasing managers’ index (PMI) also showed manufacturing at a six-month high.

Source – DOW JONES

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