Brazil’s exports fell
Brazil’s iron ore exports were also weak in April—compared to last month. Brazil exported 28.74 million tons of iron ore in April 2015. This is a month-over-month drop of 6.7%. On a YoY (year-over-year) basis, exports grew by 16.3%.
In contrast, the value of iron ore exports fell by 43.7% YoY to $1.16 billion FOB (free on board). This is because of a YoY decline in iron ore prices from $85.53 per ton to $45.07 per ton FOB.
Why should you track Brazil’s iron ore exports?
Brazil accounts for about 25% of the global market share of iron ore’s trade volume. After Australia, Brazil is the second-largest iron ore exporting country in the world. Brazil is home to one of the largest mining companies—Vale (VALE). In 2014, Brazilian iron ore exports accounted for 18% of China’s overseas purchases—compared to 19% in 2013.
As a result, Brazilian iron ore exports are a key metric for investors to watch—along with shipments out of Australia. The Brazilian Ministry of Development, Industry and Foreign Trade releases this data on a monthly basis.
Impact on companies
Although the overall iron ore consumption is weak in China, Brazilian iron ore exports are losing more ground than Australian iron ore exports. This hurts Vale more than BHP Billiton (BHP) (BLT) and Rio Tinto (RIO).
A decrease in prices due to a supply glut negatively impacts other producers like Cliffs Natural Resources (CLF). It also negatively impacts the iShares MSCI Global Metals & Mining Producers ETF (PICK). BHP Billiton accounts for 17.9% of PICK’s holdings. The SPDR S&P Metals & Mining ETF (XME) also invests in some of these stocks.
In the next part of this series, we’ll see how Japanese iron ore imports progressed in March.