(The opinions expressed here are those of the author, a columnist for Reuters.)
* GRAPHIC: China's iron ore imports vs. SGX price: https://tmsnrt.rs/2Yqwfvl
By Clyde Russell
LAUNCESTON, Australia, July 4 (Reuters) - There are tentative signs that the supply crunch that has driven iron ore prices to their highest in more than five years is starting to ease, although the market is still some way from returning to balance.
Shipments from the two major exporters, Australia and Brazil, show a recovery in June, according to vessel-tracking and port data compiled by Refinitiv.
For the whole of June, Australia exported 76.8 million tonnes, down slightly from May's 77.9 million. But measured by daily average, June's exports of 2.56 million tonnes were actually above the 2.51 million achieved in May.
The performance over May and June is also the strongest on a daily average basis since December 2017, further illustrating that Australia's exports have bounced back from weakness in March and April, caused by disruption from a tropical cyclone.
Meanwhile Brazil's exports also increased in June, reaching 30.6 million tonnes, up from May's 28.3 million, according to Refinitiv.
June's shipments were the highest since December's 35.7 million tonnes, although there is still room for further gains given Brazil's monthly exports averaged 32.2 million tonnes in 2018.
Still, Brazil's exports in the past two months are up strongly from just 16.5 million tonnes in April and 23.7 million in May.
Exports were curbed in the wake of pit closures and safety checks after the collapse of a tailings dam at a mine operated by Vale VALE3.SA on Jan. 25 resulted in the death of more than 230 people.
While some of the mines have re-opened, Vale expects its output to be about 40 million tonnes lower in 2019 than it was last year.
This tightening of supply resulted in port stocks in China, the world's biggest importer of the steel-making ingredient, shrinking by some 33.6 million tonnes since mid-April, according to data compiled by consultancy SteelHome.
Port stocks SH-TOT-IRONINV stood at 115.3 million tonnes in the week to June 28, the lowest since January 2017 and down from a peak of 162 million tonnes in June last year.
China's imports of iron ore have been soft, with vessel-tracking data showing 77.6 million tonnes in June, down from 80.2 million in May.
Official customs data for June will only be released next week, but imports in the first five months were 423.9 million tonnes, down 5.2% from the same period a year earlier.
The lower supply has resulted in iron ore prices surging to the highest since January 2014. Benchmark 62% ore delivered to China MT-IO-QIN62=ARG ended Wednesday at $125.20 a tonne, according to commodity price reporting agency Argus.
Iron ore futures on the Dalian Commodity Exchange DCIOcv1 ended on Wednesday at 902 yuan ($131.29) a tonne, the highest close since trading started in 2013.
Spot iron ore has gained 66% since the Jan. 25 Brazil dam disaster and 94% since the current uptrend began in late November.
While the price spike has been justified by the loss of supply from both Brazil and Australia and the subsequent running down of port inventories in China, the question has to become is the current price still reflective of supply-demand dynamics, or is it in bubble territory?
Certainly, it's reasonable to expect prices to remain elevated until China is able to buy as much iron ore as it needs. But the export figures for June suggest that this point is getting closer.
It's also worth noting that exports from Brazil in June will only arrive in China late this month or in August. Those coming from Australia tend to take at least 16 days to make the voyage.
This means that there is the possibility that China's imports recover somewhat in July, and perhaps by a greater margin from August onwards. (Editing by Kenneth Maxwell)
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