| MANILA, March 31
MANILA, March 31 With enough iron ore to
construct Paris's Eiffel Tower nearly 13,000 times over, China's
ports are bursting with stockpiles of the raw material and some
of them are demolishing old buildings to create more storage
space, trading sources said.
China's domestic iron ore production jumped 15.3 percent in
January-February as a price rally last year extended into 2017,
causing imported ore to pile up at the ports of the world's top
buyer. Stockpiles are at their highest in more than a decade and
are affecting prices.
Inventory of imported iron ore at 46 Chinese ports reached
132.45 million tonnes on March 24, SteelHome consultancy said,
the highest since it began tracking the data in 2004. A third of
the stocks belongs to traders and the rest is owned by China's
steel mills, SteelHome said. SH-TOT-IRONINV
That volume would make about 95 million tonnes of steel,
enough to build 12,960 replicas of the 324-metre (1,063-foot)
high Eiffel Tower in Paris.
Global iron ore prices are now at just above $80 a tonne
from a 30-month peak of $94.86 reached in February, largely due
to the growing port inventory.
Prices surged 81 percent last year .IO62-CNO=MB, bringing
relief to miners after a three-year rout. The rally stretched
into 2017, inspiring marginal producers to resume business and
lifting supply as China's steel demand waned.
Further falls in the price of iron ore risk shuttering
Chinese capacity again. That could boost China's reliance on
top-grade exporters Vale, Rio Tinto and BHP
Some ports, trying to manage their storage space, have in
recent weeks rejected vessels carrying lower grade iron ore that
is less preferred than higher quality material and could take
months to clear, said a source at a foreign trading firm that
has millions of tonnes of the steelmaking ingredient at Chinese
"We have sent our people around the major ports in China and
some are trying to find extra space. They're demolishing some
abandoned buildings to create more space," said the source, who
declined to be named because he is not permitted to discuss the
If iron ore stocks continue rising "we're going to reach
maximum physical capacity at all ports in China by early June,
said the source. "We saw some ports rejecting low-grade
shipments which are very difficult to liquidate."
"TOO MUCH STOCK"
Including another 40 million tonnes of iron ore at China's
steel mills "that's too much of stock," said Li Xinchuang, vice
chairman at China Iron and Steel Association.
"It will be very dangerous for the price. That's what's very
worrying about it," Li told Reuters at an industry conference on
Thursday. Li said most of the stocks in ports were high quality
iron ore despite perceptions in the market that the bulk of it
But officials at key Chinese ports for iron ore imports -
Rizhao, Tangshan and Caofeidian - said they have enough storage
capacity to take in more cargoes and that they were not turning
away any shipments.
An official at Jingtang port in Tangshan said there are 15
million tonnes of iron ore stocked there currently, not far from
its capacity of 20 million tonnes. The port in Qingdao, also a
major destination for iron ore shipments, did not respond to a
request for comment.
Australian miner Fortescue Metals Group, the
world's No. 4 iron ore supplier which ships lower grade material
mainly to China, said its deliveries to the country are
"continuing as normal."
"While port stocks overall are at relatively high levels,
Fortescue's share of those stocks aligns with our market share
of imported ore into China," Fortescue CEO Nev Power said by
email in response to a Reuters query.
Chinese ports can refuse discharge of some shipments and
it's up to the importer to find another port but costs due to
delays would be borne by the importer, said a shipping manager
for a Chinese trading firm.
Still, slow demand could swell port stocks further as more
shipments tied to Chinese mills' long-term contracts with miners
arrive and traders scour the market for clients.
"We have a fleet of vessels on their way to China with no
buyers. We're trying to find buyers," said the foreign trading
(Reporting by Manolo Serapio Jr.; Additional reporting by Aaron
Bunch in Perth and Beijing Newsroom; Editing by Raju