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What Iron Ore Shipments Tell Us about Outlook for Iron Ore Prices

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Aug. 30 2016, Updated 7:04 p.m. ET

Iron ore shipments

Iron ore shipments from major ports in Australia and Brazil (EWZ) are key indicators for investors, as they give the supply-side perspective of the iron ore equation. In this article, we’ll see how shipments are shaping up for the latest month and how they’re expected to pan out going forward.

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Shipments slowdown in July

According to the latest data, iron ore exports from Port Hedland fell by 7% month-over-month in July 2016 to 38.7 million tons. June shipments were a record 41.8 million tons. However, the shipments in July were 9.7% higher year-over-year.

Major iron ore players such as BHP Billiton (BHP) (BBL), Fortescue Metals Group (FSUGY), Atlas Iron, and Rio Tinto (RIO) ship iron ore out of Cape Lambert and Dampier.

The current surge came after Roy Hill, an iron ore project in Western Australia, started shipping ore in December 2015.

Brazil’s shipment volumes

Brazil accounts for ~25% of global iron ore trade volume. Vale (VALE) is a major iron ore producer in Brazil. Brazil’s iron ore exports for July were 4.2% higher month-over-month, but they fell by 11% YoY. Iron ore exports totaled 30.2 million tons in July compared to 29 million tons in June.

Vale’s 90 million tons per year for its S11D project remains on track to come online later this year and ramp up toward its full capacity after that.

Roy Hill and S11D should keep the shipments strong from Australia and Brazil, respectively. In turn, this could be negative for iron ore prices.

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