China's stockpiles of iron ore won't hurt Australian miners, ratings agency Fitch predicts.
"The fundamentals underpinning China's demand for key commodities from Australia remain unchanged," Fitch wrote on its website this week.
Australian iron ore miners have been struggling with negative market sentiment as iron ore inventory at China's major ports reached a two-year high, hitting 105 million tonnes as of March 7, 2014.
Lower GDP forecasts in China and weak commodity prices have contributed to uncertainty among coal and copper miners as well. China is Australia's biggest customer for these commodities.
"We believe a combination of seasonal and one-off factors have clouded market conditions, and Chinese demand for Australian commodities is not about to decline drastically," the ratings agency wrote.
The Chinese government's crackdown on pollution has extended the seasonal slow down as steel-makers are forced to upgrade their plants to meet environmental standards.
Fitch expects China's steel production to pick up over the next few months now that Lunar New Year festivities are over.
But while the agency believes that Chinese demand for commodities will keep rising in absolute terms, and that China's strong construction industry continue boosting Australian iron ore exports, the "extent of each year's incremental demand is likely to decline progressively."
"Fitch is cautious that China's incremental demand for commodities (including iron ore) may have peaked – and will not revisit the 2008 to 2013 level that was fuelled by China's economic stimulus."