UPDATE 1-Australia's Port Hedland ships 25 pct more iron ore to China in Dec
* Port's iron ore shipments to China up 25 pct to record level
* Increase coincides with restocking of ore by China steel mills
* Annual cyclone season also a factor
SYDNEY, Jan 4 (Reuters) - Iron ore exports to China from Australia's Port Hedland, a bellwether for Chinese industrial activity, surged 25 percent in December from the previous month to a record level, shipping data showed.
The rise coincides with the return of Chinese steel mills to the seaborne iron ore market following a prolonged period of destocking in mid-2012.
It also precedes the Australian and Brazilian cyclone seasons, which run until April and each year cause delays to freighter movements.
China imported 20.23 million tonnes via the port in December compared with 16.17 million tonnes the previous month, according to statistics from the Port Hedland Port Authority.
Shipments were also up a hefty 21.6 percent on December 2011, figures showed.
Over the destocking period, iron ore slipped below $80 a tonne as sales dried up and mills lived off their stockpiles.
The fall led to the closure of some of China's own iron ore mines, which supply about half the country's needs and generally require prices of around $120 a tonne to operate above water, setting the stage for the surge in imports once the mills started buying again.
Iron ore prices have been rising over the last three months. Spot iron ore prices climbed to a 15-month high of $149.80 a tonne on Thursday.
The rebound in prices is a major boon to Australia as iron ore is the country's single biggest export earner.
Total iron ore shipments from Port Hedland in December jumped 20 percent to almost 26 million tonnes, also the highest reading on record. Japan took 2.64 million tonnes and South Korea 2.24 million tonnes.
BHP Billiton is the port's biggest user, followed by Fortescue Metals Group Ltd.
Fortescue last week reinstated expansion work to mine an additional 40 million tonnes of iron ore annually from its deposits near Port Hedland.
Rio Tinto , Australia's largest iron ore producer, expects annual global demand for iron ore to grow by a compound 2.2 percent a year, or 25 percent in total over the next 10 years. Much of that growth will come from China.
"For iron ore this equates to a 450 million tonne increase or around half the 800 million tonnes that was added in the prior 10 years," said Morningstar in a client note.
Rio Tinto does not ship ore from Port Hedland but uses the nearby ports of Cape Lambert and Dampier.