By Rhiannon Hoyle
SYDNEY--Iron-ore shipments through Australia's Port Hedland, the
world's largest iron-ore export hub, slumped last month as China's
push for clearer skies during a global summit in Beijing curbed
demand.
Steel mills and factories were temporarily closed for the
high-profile Asia-Pacific Economic Cooperation forum in an effort
to reduce air pollution as leaders from around the world visited
Beijing. Analysts had forecast curbs on heavy polluters across
provinces including Hebei and Shandong, both major steel-producing
regions, would damp shipments to the world's No. 1 buyer in
November at a time when rocketing supply and already subdued demand
had knocked prices to their lowest level in more than five
years.
According to the Pilbara Ports Authority, which controls the
Port Hedland facilities, 34.4 million metric tons of the
steelmaking ingredient was shipped from the port last month. That
was an 8.1% decrease on the month earlier.
Shipments destined for China were down 8.5% on-month at 29.0
million tons, a seven-month low.
"The fall in iron-ore exports to China in November likely
reflects weaker demand after steel mills in Hebei cut steel output
for cleaner air ahead of the APEC conference," Commonwealth Bank of
Australia analyst Vivek Dhar said.
Mining companies including BHP Billiton Ltd. (BHP.AU),
Australia's No. 2 iron-ore miner, Fortescue Metals Group Ltd.
(FMG.AU) and Atlas Iron Ltd. (AGO.AU) use Port Hedland. The port is
located in Australia's remote northwest Pilbara region.
Iron-ore prices have plunged nearly 50% this year, to less than
US$70 a ton, after a surge in supply from new and expanded mines in
Australia. However, analysts say China's appetite for the raw
material also appears to be waning as its property sector
slows.
Demand is expected to stay weak as the Northern Hemisphere
enters its winter months.
"Buying from mills will most likely remain subdued as the colder
weather in the north stifles finished steel sales," said Kash
Kamal, an analyst at London-based broker Sucden Financial.
Low iron-ore prices have forced many Australian producers to
curb spending to ensure their operations remain profitable. On
Friday, Fortescue said it would spend 50% less developing its
mining operations this year than previously forecast, deferring
projects and exploration while it rides out the price slump.
It is also putting pressure on Australia's economy, which relies
on commodities exports for revenue and has yet to see a strong
recovery in nonmining sectors.
Still, while iron-ore shipments through Port Hedland were down
on-month, the number of cargoes leaving the port remained
significantly higher on-year.
Iron-ore traffic through the hub has risen sharply in recent
years as mining companies have raised output in Pilbara, with
production now starting for operations planned when prices were
booming. Exports in November were up 23% compared with year-earlier
volumes, with shipments destined for China 30% higher.
The Australian government expects Australia's total iron-ore
exports, which includes those from the Dampier and Cape Lambert
ports used by Rio Tinto PLC (RIO.AU), to rise 22% in 2014 to 707
million tons.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com