Posted on 07 Apr 2016
The holdings surged 2.3% to 97 million tonnes last week, the highest since April 2015, according to Shanghai Steelhome Information Technology Co.
After rising for the past three quarters, they may top 100 million tonnes in the coming months, according to MineLife Pty Ltd and Westpac Banking Corp.
“There’s every chance that port inventories will swell to above 100 million tonnes in the near term,” Gavin Wendt, founding director and senior resource analyst at MineLife, said by e-mail. “This will obviously have an impact on iron ore prices and cap the potential for any further recovery.”
While iron ore has staged a surprise rally in 2016 as Chinese policymakers signalled their willingness to bolster growth, prices have given up some of their gains in the past two weeks as the holdings rose.
Billionaire Gina Rinehart’s Roy Hill venture in Australia is ramping up operations this year, and last month dispatched its inaugural China-bound cargo. Miners including Rio Tinto Group and BHP Billiton Ltd are targeting higher output and figures on Tuesday showed exports from Port Hedland at the highest ever.
Ore with 62% content in Qingdao was at US$54.75 a dry tonne on Tuesday after falling 2.8% last week, according to Metal Bulletin Ltd. In the first quarter, the price rose 23% as steel mills in China boosted output before the peak-construction season, the country’s leaders pledged to back growth and supplies from Port Hedland were disrupted in January.
Futures in Asia fell yesterday, with the SGX AsiaClear contract losing 1.7% to US$48.70.
“Given the supply disruption in the first quarter, what we expect is that suppliers would try to meet their targets” by increasing shipments, said Di Wang, an analyst at CRU Group. “Usually a rising inventory level indicates the oversupply situation in the market, which would put pressure on price.”
Exports from Australia’s Port Hedland climbed to a record 39.53 million tonnes in March from 36.63 million in February, according to data from the port authority. The facility handles shipments from BHP, Fortescue Metals Group Ltd and Rinehart’s Roy Hill.
