Why Iron Ore Exports Aren’t Slowing Down Anytime Soon



Iron ore shipments

The data for iron ore exports from Australia and Brazil (EWZ) serve as a key supply-side indicator. Exports from these two countries form a major part of the overall seaborne iron ore trade globally.

According to data released by the Pilbara Ports Authority, iron ore exports for January 2018 grew 2.0% year-over-year (or YoY) to ~41.1 million tons. On a month-over-month basis, however, imports declined 11%. One of the reasons for lower shipments could be the port remaining closed for 43 hours in January due to Tropical Cyclone Joyce.

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Port Hedland is Australia’s largest iron ore loading port. Out of Australia’s four large miners, it’s used by three—BHP (BHP), Hancock Prospecting, and Fortescue Metals Group (FSUGY). Rio Tinto (RIO), on the other hand, uses Port Dampier. Iron ore shipments to China from Port Hedland fell to 34.7 million tons, the lowest level since July 2017.

Shipments from Brazil

Iron ore shipments from Brazil also rose 5.3% YoY in January 2018 to 30.44 million tons. While volumes increased, in value terms, iron ore exports fell 5.5% YoY for Brazil. In 2017, shipments rose 2.6% to 383.4 million tons. Exports of iron ore from Brazil have been increasing yearly since 2013.

The majority of the iron ore produced in Brazil comes from Vale (VALE), which produces very high-quality ore.

More supply going forward

As we discussed above, Port Hedland was closed for 43 hours in January due to the cyclone, which impacted shipments to some extent. However, apart from the monthly irregularities, 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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