Port Hedland’s iron ore exports
Exports from Port Hedland, the world’s largest bulk exporting port, indicate what volumes of iron ore are being shipped out of Australia to China and other ports. This important indicator shows the ongoing supply from major iron ore players, including BHP Billiton Limited (BHP), Fortescue Metal (FSUGY), and Atlas Iron. These figures are released monthly by the Port Hedland Port Authority.
Shipments through Port Hedland accounted for 55% of the total iron ore exports from Australia in 2013. More than 80% of the shipments from this port are bound for China. Plus, Rio Tinto (RIO) ships iron ore out of Cape Lambert and Dampier.
Slump in November volumes
Shipments from Port Hedland slumped in November, declining 8.1% month-over-month. Iron ore exports totaled 34.4 million tons, which is an increase of 22.7% year-over-year, compared to a 30% year-over-year increase for October. Shipments were also up 3% over the previous month. Out of 34.4 million tons, 29.0 million tons were shipped to China.
The slump was mainly due to the slowing shipments to China. These shipments hit a seven-month low after the Asia-Pacific Economic Cooperation (or APEC) forum summit that was held in China. In view of this conference and increasing pollution, the government ordered the closure of some mills, particularly in the Hebei province of China. As we’ll discuss later in the series, the factory output fell in November for China. This should also have contributed to the declining volumes.
China’s iron consumption
China is the lifeline of iron ore producers, consuming two-thirds of the seaborne iron ore. The sustained slowdown in China and consequent lower export volumes hurt iron ore companies, and more so with the high costs and high debt, such as Cliffs Natural Resources (CLF).
To take a broader approach toward investing in this sector, you can look at the SPDR S&P Metals and Mining ETF (XME).