Supply of iron ore from Australia is surging once more in a sign that stronger than expected iron ore prices may be a temporary phenomenon.
The world's largest bulk export terminal, Port Hedland, shipped more iron ore in March than any month in history.
The 39.53 million tonnes of iron ore shipped eclipsed the 39.4 million tonnes shipped in September 2015 and suggest the sector is rebounding from an interrupted start to 2016.
Shipments in January were interrupted by a cyclone and were Port Hedland's lowest monthly output since mid 2014.
Exports in February were better at 36.33 million, but were still 3 million tonnes lower than was shipped in the longer month of March.
January's supply interruption at Port Hedland coincided with a port outage in Brazil and some distressed producers exiting the market, and iron ore prices duly surged by more than 61 per cent between January 13 and March 7 when the commodity was fetching $US63.74 a tonne.
Record exports from Port Hedland could put pressure on the strength of those prices, but not if Chinese demand continues to be as strong as it has been in recent months.
Chinese demand also appears to have been a factor in the recent commodity price rally, with the influential Purchasing Managers Index for March showing the strongest growth in the middle kingdom since July 2015.
Steel prices have also improved, with prices for Shanghai rebar rising by more 16 per cent in March, and SGX analyst Adrian Lunt said recent policy measures in China had also been positive for iron ore and coking coal prices.
"It was relatively clear during the National People's Congress meetings in March that the focus of policymakers has switched more heavily towards supporting short-term growth," he said in a note to clients.
"Uncertainty looks set to linger in the near term as the [iron ore] market seeks direction."
Source: smh