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Iron Ore Supply Stays High: Could Prices See More Pressure?

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Iron ore shipments

As major seaborne iron ore exporters are in Australia and Brazil (EWZ), it’s imperative for iron ore investors to track iron ore exports from these countries. They serve as a key supply-side indicator.

Iron ore shipments from Port Hedland in Australia set yet another record in March when they rose 7.7% YoY (year-over-year) to 42.1 million tons. Month-over-month, imports rose 9.3%, which was expected because February has fewer days than March. China accounts for 80%–85% of Australian iron ore exports.

Port Hedland is Australia’s largest iron ore loading port, accounting for ~60% of the country’s iron ore exports. Major miners BHP (BHP), Hancock Prospecting, and Fortescue Metals Group (FSUGY) use the port, whereas Rio Tinto (RIO) uses Port Dampier.

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Shipments from Brazil

Unlike Australia, Brazil’s iron ore shipments fell 17.7% YoY in March 2018 to 29.9 million tons. In 2017, shipments rose 2.6% to 383.4 million tons. Exports of iron ore from Brazil have been increasing yearly since 2013. Most iron ore produced in Brazil comes from Vale (VALE), which produces high-quality ore.

Higher supply

Shipments from Australia and Brazil have been rising, monthly irregularities aside. Roy Hill in Australia and Vale in Brazil are still ramping up, which should lead to higher volumes in the next one or two years.

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