The iron ore boom powered by China is cooling, holding out the prospect that if it continues, Australia’s current boom will take a hit in coming months.
As will earnings for the December half year period for the likes of BHP Billion and Rio Tinto.
We may learn more on this when both companies release production and financial reports in the next month or so.
Rio’s second quarter and first half production report is out this Wednesday and interim earnings on August 5.
BHP’s 4th quarter and financial production report is out on July 21 and the profit report is due August 25.
The market will be expecting both companies to address the noticeable slowdown in Chinese iron ore imports in recent months, the latest being an 9.1% fall in June from May.
It was the third monthly fall in a row and iron ore imports are now down a massive 25% from the monthly figure for December 2009.
At the same time spot iron ore prices fell again last week.
Imports dropped to 47.2 million tonnes in June from 51.9 million tonnes in May.
Imports were down 15% from 55.3 million tonnes in June of last year.
In March they hit 59.01 million tonnes and were 49.38 million tonnes in February.
Iron ore imports totalled 62.16 million tonnes back in December of last year, so the fall since then has been substantial, around 15 million tonnes, or 25%.
Chinese steel prices have fallen more than 15% in the past two months as activity in housing slows and car production drops.
That has seen Chinese steel companies cutting back on spot market purchases of iron ore.
As a result, spot prices for 63.5% Fe (iron) fines have fallen to $US128-130 per tonne cfr China on Friday, and 7.5% from $US139-140 a tonne the previous Friday.
Indian miners are also cutting prices for shipments into China.
Falling Chinese ore demand has also helped push the Baltic dry freight index to a 14 month low last week (but Chinese imports of soybeans didn’t impact the index).
As well, copper imports fell in June from May, the third straight monthly decline.
Copper imports were 328,231 tonnes, under forecasts and 100,000 tonnes lower than expected and 17.3% less than May.
China’s oil imports jumped to 5.42 million barrels a day, or topping 22 million tonnes for the month for the first time ever.
Soy imports at 6.2 million tonnes were 30% above previous record, and have reportedly swamped China’s facilities for grain and oilseeds.
China has been taking advantage of cheap prices to boost purchases, but it has failed to do that so far with copper, despite the price dropping 17% in the June quarter.
Steel exports continued to surge ahead of the government scrapping export rebates this week (July 15).
That will see steel exports fall sharply.
