Thursday, January 13,
Spot iron ore prices were on course to hit fresh eight-month highs on Thursday, powered by sustained Chinese buying and supply concerns as a tropical cyclone threatens to interrupt production and shipments in top exporter Australia.
Adding to supply worries are heavy rains in Brazil and limited shipments from India, the next two biggest exporters of iron ore, which coupled with firm Chinese demand could push prices to $200 a tonne, a level not seen since 2008, traders and analysts said.
Tropical cyclone Vince is headed towards Australia’s northwest coast, home to Port Hedland, the region’s largest iron ore export port, the weather bureau said on Wednesday.
There is a “potential for the cyclone to disrupt Australian iron ore shipments early next week and possibly hinder mining,” dry bulk consultancy Commodore Research said in a note.
“Australian iron ore exports could come under moderate near-term pressure. If the disruption is very severe, there is a chance that iron ore importers would eventually need to source more iron ore from Brazil, India and other exporters,” it said
Mining giants BHP Billiton , Rio Tinto and Fortescue Metals export hundreds of millions of tonnes of iron ore from the Pilbara region each year and cyclones frequently disrupt production and shipping in the Nov. 1-April 30 cyclone season.
The potential disruption to Australian exports along with the possibility that India’s top producing state of Orissa may ban exports to meet domestic demand are likely to keep spot iron ore well bid, traders said.
Supply of Indian ore had been tight since the southern Karnataka state banned exports in July and analysts say another ban in Orissa would sharply reduce supply to the spot market.
Indian ore with 63.5 percent iron content was being offered at $182-$184 a tonne, including freight, on Thursday, versus $181-$184 on Wednesday, market participants claimed.
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