Australia's iron ore exports have surged to near-record highs on heavy Chinese buying, setting the scene for strong production results from BHP Billiton and Fortescue Metals this week.
Shipments of the country's most valuable commodity export touched 32.8 million tonnes in November, after a 69 per cent increase the previous year, according to Bureau of Statistics figures supplied to UBS.
The strong monthly performance was just shy of the record 33.2 million tonnes recorded earlier in the year, and came despite a sharp fall in shipments to Japan.
Instead, China stepped in to pick up the slack, buying 74 per cent of Australia's iron ore exports in the year to November, the figures showed.
As investors await production reports from BHP Billiton and Fortescue Metals Group, which are due today, the surge is a further sign of the industry's strength after Rio Tinto last week revealed record iron ore production of 47.2 million tonnes in the fourth quarter.
An analyst at UBS, Glyn Lawcock, said he expected BHP to report more good news, amid signs global steel production may have expanded by 3 per cent in the quarter.
"We expect the company to report strong quarterly production figures underpinned by increased demand for raw materials from the global steel industry," Mr Lawcock said in a note to clients.
Port Hedland figures last week also showed that growth in iron ore exports continued into December, with shipments from the West Australian port rising 6 per cent to 14.87 million tonnes.
Spot prices are now about 90 per cent above last year's contract prices, and the figures add more weight to producers' push for hefty rises in negotiations for benchmark prices for the 2010 financial year.
Insatiable demand for iron ore is expected to push up contract prices by as much as 40 per cent, but Rio Tinto and BHP have different exposure to the gains.
An analyst at Macquarie, Brendan Harris, said BHP might benefit from this surge more than Rio because it sells about 30 per cent of its iron ore on the spot market, compared with a smaller share from Rio.
But Mr Lawcock said that with spot prices 90 per cent above last year's contracts, Rio's weighting towards contracts could give it greater leverage to rising iron ore prices.
Exports of Australia's other huge commodity export – coal – had a quieter month in November, the ABS figures showed.
Shipments of coking coal used in steel mills fell 4.3 per cent to 7.5 million tonnes, while thermal coal used for power generation dipped 13.1 per cent to 10.8 million tonnes.
Despite these declines, analysts have forecast substantial price rises for coal because, like iron ore, spot-market prices are also more than 30 per cent above last year's contract prices.