Iron ore shipments to China from Port Hedland in Western Australia fell 11.5% in August, said the port authority Tuesday, signaling a possible cooling of demand from the world's biggest importer of the steelmaking ingredient.
It may also reflect China's attempt to curtail its reliance on Australian iron ore in light of the proposed production joint venture between major exporters Rio Tinto Ltd and BHP Billiton Ltd, analysts say.
Mark Pervan, senior commodities strategist with ANZ, says China has been sourcing more ore from Brazil of late.
"They may be trying to dilute somewhat their reliance on a BHP-Rio tie-up," Pervan told Dow Jones Newswires.
While still heavily dependent on Australian ore, China is "tweaking" its imports by "taking a higher proportion from Brazil and supplementing it with lower-grade ore from South Africa", Pervan said.
The lower Port Hedland shipments may also reflect a cooling of the Chinese spot market in the past month or so, Pervan said.
Rio Tinto, which doesn't export from Port Hedland, said Friday that Chinese spot prices have slumped to around US$80 a ton, from more than US$100 early last month.
The price fall mirrors recent declines in Chinese steel prices, said Rio iron ore chief executive Sam Walsh.
Rio and BHP are committed to have their joint venture in place by the middle of 2010, Walsh said, but denied that this will reduce competition in the iron ore market.
Port Hedland in Western Australia's Pilbara region is BHP's key Australian iron ore port, while Rio exports from the Pilbara go through ports at Dampier and Cape Lambert.
Despite the Chinese dip, Port Hedland's overall iron ore exports rose 2% in August to 14.22 million metric tons, according to an update on the Port Hedland Authority's website Tuesday.
The total included 9.82 million tons moved to China, down from 11.1 million tons in July.
China's slump was more than compensated by shipments to South Korea, a traditional customer of BHP, which saw its exports nearly triple to 2.11 million tons.
A BHP spokesman declined to comment on the figures, saying the company will make a statement in its next quarterly production report, due next month.
Fortescue Metals Executive Director Graeme Rowley said he is unsure why Chinese exports fell.
"All I know is that we achieved our targeted tons (for August), so if there has been a drop it comes from other sources, not from ourselves," he told Dow Jones Newswires.
Fortescue, which ships only to China, is seeking to ramp up its Pilbara production to a rate of 45 million tons a year by the first half of 2010.
Source: Marketwatch
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