LAUNCESTON, Australia (Reuters) – The relentless climb in China’s port inventories of iron ore may not be as worrying to the market as they appear, more a reflection of a change in dynamics than anything else.
Port stockpiles stood at 158.6 million tonnes of the steelmaking ingredient as of the end of last week, close to the prior week’s record of 159.1 million, according to data from consultancy SteelHome. That’s up from 148 million tonnes at the end of last year, and almost double the 79 million-tonne starting point of the climb in June 2016.
Journalists love comparative superlatives and in recent weeks Reuters has described the inventories as enough to build Australia’s Harbour Bridge almost 1,900 times over or Paris’s Eiffel Tower 19,000 times, even to construct enough cars to reach from Earth to Moon if lined up nose to tail.
There’s nothing inherently wrong with using such comparisons as they are eye-catching and give readers an idea of how much iron ore is piled up at Chinese ports. But just because something is big doesn’t necessarily mean it is creating a proportionately sized problem.
This may well be the case with China’s iron ore inventories, which at first glance look large enough to cause an overhang of supply in the world’s top steelmaker.