Iron Ore Giants Shipment Targets Seen Under Threat by Macquarie
Australia’s biggest iron ore producers shipped less than expected in the past three months, jeopardizing their ability to meet full-year guidance, according to Macquarie Group Ltd.
Data from Western Australia’s key iron ore terminals indicate exporters moved combined cargoes totaling about 209 million metric tons in the three months to Sept. 30, compared to a Macquarie forecast of 216 million tons, the bank said.
“The weaker shipping rate was largely attributable to the major producers,” Macquarie analysts wrote in a Sept. 30 note, cutting their forecasts for shipments in the quarter for BHP Billiton Ltd., Rio Tinto Group and Fortescue Metals Group Ltd. by 2 percent, 3 percent and 6 percent respectively. Australia is the world’s largest exporter of iron ore.
London-based Rio is likely to miss its full-year shipments guidance of 330 million tons by about 3 million tons, while BHP could struggle to achieve the upper range of its output forecast amid a rail maintenance program and as it commissions a crusher at the Jimblebar complex, according to Macquarie. BHP is targeting output from its Pilbara mines of 265 million to 275 million tons in the year to June 30, the producer said in July.
Rio is forecast to produce 325.4 million tons of iron ore in 2016, according to the average of nine analysts’ estimates compiled by Bloomberg. BHP will produce 255.8 million tons in fiscal 2017, according to analysts’ estimates.
Supply Control
BHP, Rio and Fortescue declined to comment on shipments or output ahead of quarterly production statements later this month.
The largest producers need to keep a tight control on global supply to maintain prices at about $45 a ton, according to Singapore-based DBS Group Holdings Ltd. The price rally this year could be threatened as China’s steel demand begins to weaken, the bank said in a report.
Benchmark iron ore dropped about 5 percent in September, the first back-to-back monthly loss since November 2015, according to Metal Bulletin Ltd. BHP, Citigroup Inc. and Morgan Stanley, have flagged concern that the arrival of additional low-cost supply from Australia and Brazil will weigh on prices.
Billionaire Gina Rinehart’s new Australian operation, currently ramping up production, will hit a targeted rate of 55 million tons a year early in 2017, Roy Hill Holdings Pty Chief Executive Officer Barry Fitzgerald said last month. Brazil’s Vale SA, the world’s top producer, expects the first shipment from its S11D project in January.
Iron ore with 62 percent content delivered to Qingdao was unchanged at $55.86 a dry ton on Monday, according to Metal Bulletin.
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