BEIJING (Reuters) – The spread between seaborne iron ore heading to China and iron ore at China’s ports has widened to the highest in at least two years, following an increase in shipments from Australia and Brazil as disrupted mines gradually come back on track.
The average for the month of August so far of the price difference between seaborne iron ore with 62% iron content and supplies at Chinese ports was $9.42 a tonne as of Monday, S&P Global Platts data showed. That is the highest monthly average spread since the price reporting agency began publishing iron ore prices for China’s ports in August 2017.
The widening spread between seaborne iron ore prices and port prices indicates that more cargoes are underway and mills are wary to make offers given the uncertainties in macro-economy, said four sources with knowledge of the market.
In July, Brazilian miner Vale SA was allowed to partially resume dry processing operations at its Vargem Grande complex, which will add 5 million tonnes of annual production. The site was shut to check the stability of its tailings dams following a fatal dam disaster at another Vale mine in Brazil in January.
Australian ports have also ramped up shipments since Cyclone Veronica hit in late March. Iron ore exports to China from Australia’s Port Hedland in April slipped 4.2% from a year earlier to 34.6 million tonnes but rebounded by June to 42 million tonnes, 5.9% higher than a year earlier.
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