Breaking News

Dropped iron ore demand pushes Australian producers into panic

Dominant producers posted drops in output and shipment forecasts

Panic caused by declined iron ore demand surfaced in Australia. Giant producers have since adopted conservative approaches in fears of further slumps.

Sporadically punctured production
China’s construction crisis remained in deadlock with high steel prices and drastic production drops. Its import pause with Australia exerted more pressure to the building sector due to steel shortages. Feeling the most impact were largest iron ore producers from Australia.

BHP Group posted a near 5 per cent drop in Q1 iron ore output as at 19 October 2021 due to maintenance work at its Jimblebar mine, accompanied with a shortage of rail labour from COVID-19 border restrictions. Despite that, it remained optimistic about the annual production. Instead, its rival, Rio Rinto chose a conservative approach by reducing its shipment forecast on account of the manpower conundrum. Mining industry leaders said the state’s labour shortage was exacerbated by pandemic-related border restrictions reducing mobility between states. Meanwhile, miners were also having to fight harder for skilled and experienced workers amid a government-backed construction boom on the east coast.

Demand concerns from a debt crisis in the Chinese property market, along with Beijing’s stricter emission controls, also halved iron ore prices from a record peak in May 2021. BHP shares sunk by 25 per cent despite the company posted its best annual results in nearly a decade in August 2021. The company also laid out plans to scrap its dual-listed structure and exit petroleum as part of a shift toward “future-facing commodities”. Its stock was down 1.5 per cent on Tuesday, 19 October 2021 in a weaker overall market.

Iron ore production from Western Australia fell to 70.6 million tonnes from June – September, from 74 million tonnes in 2020. It was however higher than a 68 million tonne forecast by RBC Capital Markets. Output at the Australian petroleum business, which is set to be bought by Woodside Petroleum, rose 3 per cent to 27.5 million barrels of oil equivalent. Metallurgical coal output dropped 9 per cent to 8.9 million tonnes, while thermal coal production jumped 17 per cent to 4.2 million tonnes. An acute global shortage of coal (including that in China) propelled a surge in the commodity’s prices and caused power outages. It remains to be seen if China will soften its stance on the largest producer.

 

Marine Online News Team
Please email us at marketing@marineonline.com to contact the author for this article.

Chartering banner

 

Check Also

When will the shipping crisis resolve?

The shipping catastrophe stemmed from COVID-19; when will it end? It began in 2020 as …