Iron ore shipments fall 11% on month in Feb, fueling high prices

Iron ore shipments by Rio Tinto, BHP, Vale, Fortescue Metals Group and Roy Hill in Australia, along with Saldanha port in South Africa, fell 11.2% month on month in February but were up 3.3% year on year, according to S&P Global Platts’ trade flow software, cFlow.

February shipments have been lower than January exports for the past three years due mainly to seasonal weather factors in Australia and Brazil, and all major producers saw a downturn in February from the month before.

March has also started off on a weak note, when there is typically a big month-on-month jump in exports in the month as severe weather recedes and the major miners lift throughput. But this is not always the case, as happened in 2019 when March was significantly weaker than February due to a later-than-usual cyclone season in Western Australia.

Platts cFlow data shows that Q2 exports have increased by an average of almost 11%, or 28 million mt, compared with Q1 over the past four years.

Combined exports over January-February of 126.7 million mt from the four largest Australian producers were up 4.2 million mt from the same period a year earlier. Shipments from Vale of 40.3 million mt were down 3 million mt on the year before, while South African exports over January-February of 8.6 million mt were 1.5 million mt lower than in the same two months of 2020, according to Metals Analytics estimates using Platts cFlow data.

Australian fiscal year-to-date (July-February) export volumes indicate BHP and Fortescue Metals Group will need strong export performances over the remaining months of the Australian financial year to meet the upper end of their shipment guidance.

Year-to-date exports from BHP are slightly down on the same period a year earlier, while exports from Fortescue are stable, according to Platts cFlow. Exports at the lower end of guidance, along with constrained supply from Brazil, could help keep iron ore prices at high levels in the coming months. Liquidity for medium-grade fines has been very tight lately.

Iron ore shipments data is an estimate using Platts cFlow data and may not capture all vessel movements and volumes.

Total iron ore exports of 37.4 million mt in February from Port Hedland were down 3% year on year, according to Pilbara Ports Authority data. It was the first time exports had fallen below 40 million mt since February 2020.

China imported 181.5 million mt of iron ore over January-February, around 5 million mt more than in the same period of 2020, China Customs data showed.

Despite the weaker export performance from Australia and Brazil in February, iron ore port stocks in China increased to 127.7 million mt at end February, up 6 million mt since the start of the year, CEIC data showed.

Chinese mills typically finish iron ore restocking before the Lunar New Year holiday and start purchasing again over the 7th-15th days of the first lunar month, which was Feb. 18-26 this year. Most mills will restock inventory until the Lantern Festival on Feb. 26.

This year the Tangshan government imposed steel output cut requirements on several occasions in February and early March, which dented demand and procurement. This, along with slower buying activity because of the holidays, contributed to the iron ore inventory build-up in February. New sintering restrictions could also see port stocks climb higher.

But the high port stocks are having little or no impact on seaborne iron ore prices as there is a lack of liquidity. Benchmark iron ore prices continued to climb, rising around 5% over January-February to $176.09/mt CFR China for 62% Fe fines on Feb. 28, according to the Platts IODEX.

February shipment highlights: Platts cFlow

** Rio Tinto shipped 24.66 million mt from Port Dampier and Cape Lambert in February, down 6.1% month on month and up 27.1% year on year. Rio Tinto has set its production guidance for 2021 at 325 million-340 million mt.

** BHP’s shipments fell 3.5% on month and were down 4.9% on year at 20.7 million mt in February. It is targeting 276 million-286 million mt in the 12 months to June 30. Platts cFlow shows the miner exported 187 million mt over July-February.

** Vale’s estimated seaborne exports from Brazilian ports in February totaled 18.29 million mt, down 16.8% on month and edging down 0.2% on year. Vale listed its capacity resumption plan for 2021 in its latest production report; based on the miner’s plans, Metals Analytics calculates there will be an increase of 15 million mt/year of capacity at Vale’s southeastern system, 21 million mt/year in the southern system and 4 million mt/year in the northern system. This will offset a 5 million mt/year decline at other sites due to licensing delays and lower operating rates.

** Fortescue exports totaled 12.09 million mt in February, a decrease of 10.7% on month and 2.2% on year. FMG is targeting 178 million-182 million mt of shipments in the year to end-June.

** Roy Hill’s shipments from Port Hedland reached 2.82 million mt in February, down 46.2% on month and 18% on year. This was its lowest February shipments over the past three years, according to cFlow, due to port maintenance impacting shipments for around eight days. But the company plans to export 60 million mt this calendar year.

** Iron ore exports from Saldanha Port in South Africa fell 11.9% on month to 4.05 million mt in February, and were down 14.3% on year. Platts estimates Kumba’s exports from the port in February were 2.9 million mt. Its production guidance for 2021 is 41 million mt.
Source: Platts