Why Port Hedland’s iron ore exports dropped in June

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Port Hedland’s iron ore exports dropped in June

Australia accounts for a large percentage of the world’s iron ore seaborne exports. In 2013, it represented the percentage of total export volume. Port Hedland is used by companies BHP Billiton, Fortescue Metals Group, and Atlas Iron. It’s one of the major exporting ports of iron ore in the world, representing about one-fifth of the global seaborne iron ore trade. The majority of Australia’s ~400 metric tonnes of iron ore exports are shipped from Port Hedland and the neighboring Port of Dampier.Hedland Port iron ore

With mining companies raising output in Pilbara, iron ore traffic through Port Hedland has increased sharply in recent years. June exports through the port increased 21% compared to the volumes last year.

China scenario

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China, the world’s second-largest economy, accounts for ~60% of global demand for iron ore. The iron ore is used to create steel for industries like manufacturing and construction. Analysts suggest that iron ore demand has eased as Chinese steelmakers draw down existing inventories after hitting record crude steel output rates in recent months.

Amid an alleged financing scandal, traders speculate that Chinese imports of the raw material may fall with banks withholding credit and customs officials tighten checks on incoming shipments.

For the month of June, a total of 33.6 million metric tonnes of iron ore was shipped through Port Hedland—a decrease of 6.8% from 36.1 million metric tonnes in May. The decline was mainly led by weaker shipments to not only China, but other key buyers like Japan. However, compared to June, 2013, the shipments were up 21.1%.

Stockpiles at ports in China have been on a rise with increased seaborne supply. Morgan Stanley commented that with China cutting production, miners are shutting down every day with cheaper supplies increasing overseas.

Impact on companies

Taking in consideration, the year-over-year (or YoY) increase in the iron ore exports data from Port Hedland, current growth remains positive for dry bulk shippers such as Star Bulk Carriers Corp. (SBLK), Safe Bulkers Inc. (SB), Baltic Trading Inc. (BALT), and Knightsbridge Tankers Ltd. (VLCCF), as well as the Guggenheim Shipping ETF (SEA).

 

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