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How Iron Ore Shipments Could Impact Iron Ore Prices

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Iron ore exports

Because iron ore exports from major ports in Australia and Brazil (EWZ) represent a large portion of the supply side of the iron ore equation, it is important to track this data. Port Hedland is the largest iron ore-loading port in Australia. Port Dampier is another port that exports iron ore from Australia.

While BHP Billiton (BHP), Fortescue Metals Group (FSUGY), and Atlas Iron export iron ore through Port Hedland, Rio Tinto (RIO) ships ore through the Dampier port. Iron ore shipments from Port Hedland declined 2% year-over-year (or YoY) in July to 37.9 million tons, and the exports from Port Dampier were 2% higher YoY at 14.2 million tons. The exports from Port Hedland fell 12% month-over-month.

Brazilian iron ore exports, on the other hand, rose 18.2% YoY to ~$1.2 billion in July. Exports from Brazil are gaining momentum as Vale’s (VALE) largest iron ore project, S11D, started in 2017.

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More supply going forward

Despite strong demand from China, the surplus supplies from iron ore miners are putting pressure on prices. Moreover, future supplies are also expected to remain plentiful. The ramp-up of Vale’s 90 million tons per annum S11D project is going according to schedule, with a full ramp-up expected over the next couple of years. 

In addition, the Roy Hill project in Australia is also ramping up toward its full capacity of 55 million tons per year. The rising supplies in an already well-supplied market are expected to pressure prices. This trend is the main reason that analysts are expecting lower iron ore prices over the long term.

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