Brazil’s iron ore exports
Brazil’s iron ore exports are another supply side indicator. The country 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. The Brazilian Ministry of Development, Industry, and Foreign Trade releases this data on a monthly basis. Vale SA (VALE) is the major iron ore producer in Brazil.
Brazil’s iron ore exports surge
After Port Hedland’s record iron ore exports, Brazil’s iron ore exports also surged in June. Brazil’s iron ore exports came in at 32 million tons in June, compared with 27.7 million tons in May. Iron ore exports also jumped 8.4%, compared with the same month last year.
Implication for iron ore prices
While the proportion of Brazil’s iron ore exports is declining in Chinese consumption, the absolute value of Brazil’s shipments is quite high. This, along with surging exports from Australia, is keeping the supply side very strong. The demand side, led by China, remains weak. This is hurting iron ore players such as Vale, Cliffs Natural Resources (CLF), BHP Billiton (BHP) (BLT), and Rio Tinto (RIO).
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 the Chinese iron ore inventory at ports is shaping up amid higher shipments.