Iron ore port strike worries lift prices from two-year low
Iron ore prices came back from the dead Wednesday, after hitting an almost two-year low earlier this week, as BHP Billiton (ASX:BHP) warned Monday that potential strike action by tugboat workers at Australia's biggest iron-ore port would cost exporters of the steelmaking ingredient US$94 million a day in lost sales.
The world’s largest mining company said it is ready to request the government’s intervention as the potential week-long strike over pay and conditions is likely to severely affect operations. BHP and the country’s main iron ore producers, including Fortescue Metals Group (ASX:FMG) and Atlas Iron (ASX:AGO) but not Rio Tinto (LON:RIO), use Port Hedland to ship more than 1m tonnes of iron ore each day, worth about $100m at current prices.
Iron ore with 62% content delivered to the Chinese port of Tianjin climbed 1% to $98.50 a dry ton, according to data compiled by The Steel Index, after hitting Tuesday its lowest since September 2012.
Jimmy Wilson, BHP’s president of iron ore, said workers were making unreasonable demands and holding top producers “to ransom,” Business Day reports. He added BHP — Australia's second-biggest exporter of iron ore behind competitor Rio Tinto — will use “every arrow in the quiver to avoid having a strikeout.”
The Maritime Union of Australia (MUA), which represents tugboat deckhands at the port, approved unlimited work stoppages of 24 hours, 48 hours and 7 days on May 12. The union said it hasn’t decided whether to take action.
Port Hedland, in the Pilbara region of northwest Australia, has grown into one of the world's largest iron-ore export terminals in recent years as companies like BHP, Fortescue, and Atlas expand production to satisfy Chinese demand for the commodity.
The Port exported 34.8 million metric tons in April, an increase of 33% from the same month in 2013, according to the port authority.