China traders cut back Iran iron ore purchases ahead of tariff hike

Chinese companies are looking to Africa and Southeast Asia to replace Iranian iron ore, now subject to new 25 percent export tariffs. (AFP)
Updated 22 September 2019

China traders cut back Iran iron ore purchases ahead of tariff hike

  • Iran shipped 319,920 tons of iron ore to China in August, down 37.8 percent from July

BEIJING: China took fewer shipments of iron ore from Iran in August and September, according to Refinitiv Eikon data, as additional export tariffs due to be imposed by Tehran have dampened risk appetites in the world’s biggest steelmaker.

Iran’s deputy minister of industries said earlier this month that exports of all steelmaking raw materials will be slapped with a 25 percent tariff to meet domestic demand, according to Iran’s state-backed’s Press TV.

The tariffs, which will cover various products from Iran’s iron mills, including iron ore and concentrates, will come into effect from Sept. 23.

Iran shipped 319,920 tons of iron ore to China in August, down 37.8 percent from July and 23.4 percent lower than a year earlier, according to Reuters calculations based on vessel-tracking and port data compiled by Refinitiv.

In September so far, China has taken 129,534 tons of iron ore from Iran, according to the same calculations and data.

“Not many traders buy iron ore from Iran because of the US sanctions,” said Zhao Yu, an analyst with Huatai Futures, adding that the freight charges are also high.

Two Chinese traders told Reuters they could only use cash and telegraphic transfers as payment methods, as it was “too sensitive” to go through banks for transactions with Iran.

“The main advantage of Iran ore is it’s low cost,” said a trader who buys 2 million to 3 million tons of iron ore from Iran a year.

“If (Iran’s) prices go up (from the tariffs), they can be totally replaced by other mainstream ores,” he said when asked why China would not buy more, adding that they had been announced at short notice.

“There’s not enough time to buy, load and clear customs.”

The trader said his company was considering substituting iron ore from Africa or Southeast Asia for ore produced in Iranian mills.

Iran’s Ministry of Industry, Mine and Trade and customs department did not respond to requests for comment.

Iran shipped a total of 17 million tons of iron ore to overseas markets in the fiscal year ended March 20, 2019, according to data from the Iranian Mines and Mining Industries Development and Renovation Organization.

China, the world’s biggest iron ore market, consumes about 90 percent of Iran’s exports of the material. China bought 14.7 million tons of iron ore from Iran in 2018, accounting for 1.4 percent of its total imports.

“Applying such export tariffs from this month is too early,” said Keyvan Jafari Tehrani, an independent analyst of the iron and steel industry.

“I doubt whether the quantities (Iran) used to sell to China can be absorbed totally by the local market at the beginning.”


Huawei’s third-quarter revenue jumps 27% as smartphone sales surge

Updated 17 October 2019

Huawei’s third-quarter revenue jumps 27% as smartphone sales surge

  • American companies, significantly disrupting its ability to source key parts
  • Huawei was all but banned by the United States in May from doing business with American companies

SHENZHEN, SHANGHAI: Huawei Technologies Co. Ltd’s third-quarter revenue jumped 27%, driven by a surge in shipments of smartphones launched before a trade blacklisting by the United States expected to hammer its business.
Huawei, the world’s biggest maker of telecom network equipment and the No. 2 manufacturer of smartphones, was all but banned by the United States in May from doing business with American companies, significantly disrupting its ability to source key parts.
The company has been granted a reprieve until November, meaning it will lose access to some technology next month. Huawei has so far mainly sold smartphones that were launched before the ban.
Its newest Mate 30 smartphone — which lacks access to a licensed version of Google’s Android operating system — started sales last month.
Huawei in August said the curbs would hurt less than initially feared, but could still push its smartphone unit’s revenue lower by about $10 billion this year.
The tech giant did not break down third-quarter figures but said on Wednesday revenue for the first three quarters of the year grew 24.4% to 610.8 billion yuan.
Revenue in the quarter ended Sept. 30 rose to 165.29 billion yuan ($23.28 billion) according to Reuters calculations based on previous statements from Huawei.
“Huawei’s overseas shipments bounced back quickly in the third quarter although they are yet to return to pre-US ban levels,” said Nicole Peng, vice president for mobility at consultancy Canalys.
“The Q3 result is truly impressive given the tremendous pressure the company is facing. But it is worth noting that strong shipments were driven by devices launched pre-US ban, and the long-term outlook is still dim,” she added.
The company said it has shipped 185 million smartphones so far this year. Based on the company’s previous statements and estimates from market research firm Strategy Analytics, that indicates a 29% surge in third-quarter smartphone shipments.
Still, growth in the third quarter slowed from the 39% increase the company reported in the first quarter. Huawei did not break out figures for the second quarter either, but has said revenue rose 23.2% in the first half of the year.
“Our continued strong performance in Q3 shows our customers’ trust in Huawei, our technology and services, despite the actions and unfounded allegations against us by some national governments,” Huawei spokesman Joe Kelly told Reuters.
The US government alleges Huawei is a national security risk as its equipment could be used by Beijing to spy. Huawei has repeatedly denied its products pose a security threat.
The company, which is now trying to reduce its reliance on foreign technology, said last month that it has started making 5G base stations without US components.
It is also developing its own mobile operating system as the curbs cut its access to Google’s Android operating system, though analysts are skeptical that Huawei’s Harmony system is yet a viable alternative.
Still, promotions and patriotic purchases have driven Huawei’s smartphone sales in China — surging by a nearly a third compared to a record high in the June quarter — helping it more than offset a shipments slump in the global market.