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Iron Ore Exports Remain Plentiful—How’s the Outlook for 2018?

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Jan. 3 2018, Updated 7:31 a.m. ET

Iron ore shipments

The iron ore export data from Australia and Brazil’s (EWZ) is a key supply-side indicator. The exports from these two countries form a major part of the overall seaborne iron ore trade globally.

According to the data released by the Pilbara Ports Authority, the iron ore exports for November 2017 grew 0.5% year-over-year (or YoY) to ~41.4 million tons. This implies an increase of 0.9% month-over-month.

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Port Hedland is Australia’s largest iron ore–loading port. Out of Australia’s four large miners, it is used by three miners—BHP (BHP), Hancock Prospecting, and Fortescue Metals Group (FSUGY). Rio Tinto (RIO), on the other hand, uses Port Dampier. The port’s shipments to China were essentially flat at 41.0 million tons.

Shipments from Brazil

While the exports from Port Hedland were more or less flat YoY, the volumes and revenues of Brazilian iron ore exports increased substantially in November 2017. On a value basis, the exports rose 23.4% YoY to ~$1.5 billion while the volumes increased 8.6% YoY.

For the first 11 months of the year, Brazil exported 3.0% more iron ore volumes to China compared to the same period last year.  The majority of the iron ore produced in Brazil comes from Vale (VALE), which produces very high-quality ore. Despite capacity cuts, iron ore shipments from Brazil rose.

More supply going forward

Apart from the monthly irregularities, the iron ore exports from Australia and Brazil have been on the rise. Many miners in these countries are still ramping up.

Roy Hill in Australia and Vale in Brazil are still in their ramp-up phases. This ramping up should lead to additional volumes in the coming one to two years.

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