* Iran iron ore exports fell a third in June -industry body
* Around half country's private iron ore mines closed,
* Tehran already struggling with oil revenue lost through
By Manolo Serapio Jr and Maytaal Angel
SINGAPORE/LONDON, July 18 Iran's iron ore
industry is in crisis because of low prices, a senior industry
official said, with June exports the lowest in nearly two years
and ore piling up at ports.
The country's top non-oil export had been generating
much-needed revenue as crude sales drop by nearly $4 billion a
month from levels before sanctions on oil kicked in. Nearly all
Iran's iron ore exports go to China and were worth a total of
$2.4 billion in 2013, based on Chinese customs data.
But a supply glut, as major iron ore miners rushed to fill
Chinese demand that has fallen short of expectations, has pushed
prices to half the record seen in 2011. That has hurt smaller
and higher cost producers such as Iran, the world's
eighth-biggest shipper of the raw material, opening a gap for
the big three of Rio Tinto, BHP Billiton and
Iran's iron ore exports dropped by a third in June from a
year ago to 1.2 million tonnes, the lowest since September 2012,
according to the Iranian Iron Ore Producers and Exporters
Keyvan Ja'fari Tehrani, who oversees international affairs
at IRIOPEX, told Reuters that falling prices had seen stockpiles
at ports rise six-fold and forced around half of private mines
"It's not the same as the global crisis of 2008, but it can
be called a crisis."
Most of Iran's 38 million tonnes in output last year came
from less than 10 state-owned mines, Tehrani said. Still, he
said the loss of half the 11-12 million tonnes of capacity at
its roughly 150 private mines will hit exports hard as around 90
percent of private output is shipped overseas, against less than
half from the state-owned mines.
Attempts to contact Iran's mining ministry were
unsuccessful. An official at the state-owned Iranian Mines and
Mining Industries Development and Renovation Organisation
declined to comment.
BACK TO BALANCE
The shutdowns are small in a market that saw 1.2 billion
tonnes of ore shipped last year, but will give opportunities for
major iron ore exporters Australia and Brazil.
"Any kind of shutdowns will be good because they will
restrict supply and eventually (tilt) the balance back to being
a sellers' market," said James Wilson, an analyst at Morgans in
Iran was the fourth-largest supplier of iron ore to China
last year, selling 22.4 million tonnes, dwarfed by top exporter
Australia's 417 million tonnes.
Its shipments in June were less than half the 2.5 million
tonnes it sent to China in May, and far below 3.2 million tonnes
in April, based on Chinese customs data.
As well as closed mines, Tehrani said iron ore stockpiles at
Iran's two loading ports have ballooned to about 3 million
tonnes from the usual half a million, as exporters hold off on
sales in the hope that prices will recover. A similar volume is
stuck at private mines, he added.
Tehrani, whose mine in Iran's southeastern Kerman province
has stopped production, said he was not likely to reopen unless
prices climbed by at least $20 a tonne.
Iron ore has been among the hardest hit industrial
commodities, with prices falling more than a quarter this year.
After breaching $100 a tonne in May for the first time since
September 2012, prices fell as far as $89 in mid-June before
recovering to $98 this week. .IO62-CNI=SI
A Reuters poll in early July showed some analysts expect
prices to drop as low as $80 next year, as global miners forge
ahead with an expansion binge and China's once-stellar economic
"When prices were at $100, $120-plus, a lot of cargoes used
to come from Iran. But now we hardly hear any offers," said an
iron ore trader in Shanghai.
Unlike iron ore from most big suppliers, some Iranian ore
contains large amounts of sulphur, a pollutant that Chinese
mills are avoiding as Beijing tries to improve air quality.
Iranian iron ore has to be deeply discounted to compete with
higher quality cargoes from Australia and Brazil, said another
trader based in China's eastern Shandong province who used to
buy Iranian cargoes.
The price for Iranian ore containing around 60 percent iron
fell to $59 a tonne, on a free on board basis, from $91 in
January, while the 53/52-percent grade has halved to $30, said
Tehrani at IRIOPEX.
"Iron ore is still moving, but it seems to me traders or
miners are doing so because of old contracts," said Jalal
Tabrizi, managing director of Iranian shipping agency Seacargo
"As far as new business is concerned, it's not there, it's
not worth it for them."
(Editing by Joseph Radford)