Exports of iron ore from one of the Pilbara's main ports rose a little last month and analysts predict prices will follow suit as demand fuelled by China's quick recovery surprises on the upside.
The Port Hedland Port Authority shipped 14.41 million tonnes of iron ore in September, according to an update on its website.
This is an increase of 1.3 per cent on the August total of 14.22million tonnes, and is up 28 percent on the same period last year.
The authority did not provide individual breakdowns for major port users BHP Billiton and Fortescue Metals Group.
September exports to China, the world's biggest iron ore importer, fell 4.5 per cent from August to 9.38 million tonnes, well off the recent peak of 11.1 million tonnes in July. But that was more than offset by exports to the more traditional market of Japan, which rose 47 per cent to 2.35 million tonnes.
Port Hedland is BHP's key Australian iron ore port but the world's largest miner is seeking a Pilbara joint venture with its rival Rio Tinto, which exports iron ore from Dampier and Cape Lambert. Meanwhile, Goldman Sachs JBWere yesterday lifted its iron ore and metallurgical coal price forecasts on the back of tightening supply and demand fundamentals.
Analyst Malcolm Southwood said a key driver of the "more bullish" view was the group's belief that global crude steel output would rise 12 per cent next year to a record 1.4 billion tonnes.
"Raw materials constraints will become more acute in 2010, putting suppliers in a strong position to negotiate higher prices," he said in a report.
"The greatest upside exists for hard coking coal, iron ore lump and pellets."
Mr Southwood added that demand for iron ore was stronger than expected this year thanks to a faster than anticipated recovery in Chinese steel production.
"It is remarkable to think that at the start of the year we expected global steel production to drop by over 10 per cent and seaborne trade in iron ore to contract in absolute terms for the first time since 1999," he said.
"Chinese steel production has rebounded much stronger than we expected, thanks to an unprecedented level of government spending" on infrastructure.
Mr Southwood said the emergence of China as an importer of more than 30 million tonnes a year of metallurgical coal was a "real game changer" and would keep the seaborne market tight for at least the next two years.
"Spot prices for hard coking coal are already at $US170 a tonne FOB (30 per cent above contract) and we see little reason for a price reversal in the short term -- even if Chinese demand wanes, Indian buyers remain short coking coal and steel mills in Europe and northeast Asia are slowly restocking," he said.
"Price support from relatively high-cost US exporters should enable Australian suppliers to achieve $180 a tonne on contract for hard coking coal," Mr Southwood said.
Source: The Australian
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