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Flat H1 iron ore exports suggest ongoing tight supply: Platts Analytics

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Flat H1 iron ore exports suggest ongoing tight supply: Platts Analytics

Iron ore exports from major producers in the first half of 2021 were largely flat on the same period a year ago. Operational issues at Rio Tinto and Vale mean the miners will need to lift export run rates to meet full-year targets, while BHP achieved its financial year target and Fortescue Metals Group's export performance was weaker than expected.

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The lack of overall iron ore export growth and struggles on the part of some miners to achieve guidance indicate tight supply conditions will prevail this year, helping support current high iron ore price levels.

Seaborne shipments from Rio Tinto, BHP, Vale, Fortescue and Roy Hill from Saldanha port in South Africa, as well as from Paradip and Mormugao ports in India, reached 100.67 million mt in June, up 0.1% on the month but down 7.9% on year, according to analysis using cFlow, S&P Global Platts Analytics' trade-flow software.

This took volumes to 571.84 million mt in the first half of this year, down 0.2% on the year. Many producers maximize exports in June to meet targets set for Australia's financial year ending June 30.

Shipments in July are usually weaker as stocks are rebuilt and maintenance works carried out. Information collected by the S&P Global Platts Dry Bulk Freight team showed there will be upcoming port maintenance works in Australia and Brazil in July.

Highlights by producer:

  • Vale's estimated seaborne exports from Brazilian ports in June totaled 22.88 million mt, down 1.1% on the month and 6% on the year, respectively. This took January-June volumes to 126.88 million mt, up 9.2% on the year. Vale is targeting iron ore production of 315 million-335 million mt in 2021. Based on an estimate that Vale will sell around 23 million mt of its output into domestic customers, this would indicate the miner has sold around 43% of its tons available for export. Maintenance works at Tubarao is scheduled for the second half of July, which may further slow exports.
  • Rio Tinto shipped 25.71 million mt from Port Dampier and Cape Lambert in June, a decrease of 2.6% on the month and down 14.8% on the year. H1 exports totaled 154.57 million mt, down 4.7% on the year, accounting for around 48% of the 325 million-340 million mt guidance in calendar 2021. The miner carried out maintenance work at its Pilbara operations, which contributed to the weaker export performance. Work at ship loading operations at Dampier Port is scheduled for July 6-10.
  • BHP's shipments from Port Hedland dropped 0.6% on the month and by 6.7% on the year at 25.37 million mt in June. The producer's shipments totaled 142.04 million mt in the H1, dropping 3.7% on the year. BHP exported 286.69 million mt in the 2021 financial year spanning July 2020-June 2021, fully achieving the upper end of its guidance of 276 million-286 million mt.
  • Fortescue's exports reached 15.76 million mt in June, down 2.4% on the month and by 3.5% on the year, taking H1 exports to 87.13 million mt, down 0.1% on the year. The Perth-based company exported 174.14 million mt in the 2021 Australian financial year, according to Platts cFlow, versus guidance of 178 million-182 million mt.
  • Roy Hill's shipments reached 6.1 million mt in June from Port Hedland, a spike of 56% on the month and 0.1% higher on the year. The big increase was mainly due to a recovery from maintenance works in May. The company's exports during January-June were 28.97 million mt, up 12.4% on the year.
  • In June, iron ore exports from Saldanha Port in South Africa were 4.16 million mt, down 0.7% on the month and a 20.6% increase on the year. The port's H1 exports reached 25.25 million mt, down 1.9% on the year.
  • Platts Analytics has added iron ore exports from the Indian ports of Paradip in Odisha and Mormugao in Goa. Paradip is a pellet export port and Goa a low-grade iron ore port. Combined export volumes from the two ports reached 690,000 mt in June, down 45.5% on the month and 61.6% on the year. This took total volumes to 6.99 million mt over January-June, down 18.5% on the year.
  • Iron ore port stocks at Chinese ports were 123.8 million mt at the start of July, down from 126.1 million mt a month earlier, though they climbed by 800,000 mt in the last week of June, according to CEIC data, indicating producer efforts to lift exports before the end of the Australian financial year.

The above shipment volumes are an estimate using Platts cFlow. The data should be used as an indication only and may not capture all ship movements and volumes.

Platts Iron Ore and Metallurgical Coal Specifications Tree