Iron ore shipments
Iron ore shipments from major ports in Australia and Brazil (EWZ) are key indicators for investors. They represent the supply side of the iron ore equation. In this part of the series, we’ll see how shipments are shaping up for November and how they’re expected to pan out going forward.
Shipments strong even after declining
In November 2016, Port Hedland iron ore exports were 41.2 million tons. That was a rise of 10.0% year-over-year (or YoY) but a sequential fall of 1.0%. November was the third consecutive month of falling exports. But exports are still very close to the record high volumes shipped in August, or 42.9 million tons. Total shipments in the last 12 months are also a record 472.5 million tons.
Major iron ore players such as BHP Billiton (BHP) (BBL), Fortescue Metals (FSUGY), Atlas Iron, and Rio Tinto (RIO) ship iron ore out of Cape Lambert and Dampier. Roy Hill, an iron ore project in Western Australia, started shipping iron ore in December 2015.
Iron ore exports from Brazil, on the other hand, rose 12.0% YoY to 31.4 million tons. That implies a rise of 5.0% month-over-month. As we’ve already seen, Vale SA (VALE) is set to start shipping volumes from its S11D project in January 2017, which should give a further boost to export volumes.
More supply to pressure prices
Australia and Brazil are typically the lowest-cost iron ore producers. Rising exports from these destinations point to a robust low-cost supply. It’s worth noting that this rise doesn’t include ore from S11D. These low-cost supplies and the additional ore surely can’t bode well for iron ore prices going forward.
In the next part, let’s look at the iron ore inventory situation at Chinese ports.