Global iron ore exports up 6% y-o-y in Q1CY'24; but Chinese port stockpiles a concern

• Largest exporter Australia suffers weather setbacks
  
  
• India's iron ore exports hit 3-year high in Jan'24
  
  
• Miners' guidance intact, volumes may rise in CY'24
  
  

Morning Brief: The global seaborne trade in iron ore remained more or less steady in the first quarter of calendar 2024 (Q1CY'24). Data maintained with BigMint reveals that global export volumes in iron ore rose almost 6% to 376 million tonnes (mnt) compared to 356 mnt recorded in Q1CY'23.

Top 5 exporting countries

The top five exporting countries cumulatively saw volumes rising 4% to 332 mnt in this period against 318 mnt in Q1CY'23.

However, leading exporter Australia suffered a slight setback.

Australia led the charts with a 54% share of 203 mnt in the entire seaborne trade in Q1. However, y-o-y, volumes dipped 1.2% from 205 mnt in Q1CY'23.

Brazil was a far second with 84 mnt, up 12% from 75 mnt in Q1CY'23.

Third-ranked South Africa's volumes were up 7% to 16 mnt (15 mnt). India stood fourth with 15 mnt (12 mnt), up 33% while Canada, in fifth slot, showed a 23% growth to 13 mnt (11 mnt).

Factors that supported iron ore exports in Q1

• Chinese buyers active, procurements up 6%: China's imports of iron ore and concentrates rose 6% y-o-y to 310 mnt in the Q1CY'24 (January-March, 2024). The increased buying can be attributed to two factors. One was the increased crude steel production over January-February, 2024 which was up 1.6% y-o-y. Secondly, prices of the benchmark Fe 62% Australian material, CFR China, fell steadily from $135/t to $110/t in March, luring buyers. On a y-o-y basis, prices of the same remained almost flat at around $125/t amid weak fundamentals and drop in finished steel demand due to poor liquidity.
  
  
• Increased output, sales from Brazil: Leading Brazilian miner Vale recorded total iron ore production at nearly 71 mnt in Q1CY'24, up 6% y-o-y. The increase can be attributed to higher production from the Southern System, which consists of deposits located in the ore quadrangle located in the south-central part of the state of Minas Gerais. Furthermore, the S11D mine -- a large surface mine owned and operated by Vale in the Carajas region of Brazil, achieved the highest Q1 output since 2020, on the back of continued asset reliability initiatives. The Brucutu and Timbopeba mines also recorded good output. Overall, q-o-q, however, Vale reported a 21% drop in output. With the y-o-y increased output, Q1 sales rose 15% to 53 mnt because of the absence of port loading restrictions that had negatively impacted Q1CY'23.
  
  
• India's iron ore exports hit 3-year high in Jan: Exports of iron ore by India spiralled to a nearly 3-year high of 5 mnt in January 2024, the highest witnessed since March 2021. The top importer was China, accounting for a lion's share of shipments from India, followed by Malaysia, Qatar etc. The comparatively higher prices of imported iron ore of other origins amid the prolonged squeezed margins of Chinese mills kept interest in low-grade Indian ore alive. Prices of benchmark Fe 62% fines from India spurted over 25% between end-October and early January. In comparison, low-grade Indian fines inched up just 5% since November 2023, making these an attractive proposition for Chinese buyers.
  
  

Plus, Chinese buyers did pre-holiday bookings.

Challenges in Q1

• Exports from Australia drop: Australia's iron ore and pellet export shipments dropped 17% m-o-m and to their lowest level in five years in February 2024 to around 57.50 mnt. Certain factors were responsible for the decline. First, Australia was hit by unfavourable weather in January. Heavy rains disrupted mining operations and logistics. As a result, miners had to opt for planned shutdowns in February, making it even harder to keep up with export demands. Secondly, exports to the world's largest importer, China, fell 15% m-o-m to 48 mnt in February as Chinese steel mills had procured in advance, ahead of the Lunar holidays. As a result of the above factors, Rio Tinto, the world's leading iron ore miner, saw its shipments dip 5% y-o-y to 78 mnt in Q1CY'24 while FMG's fell 6% y-o-y.
  
  
• SA's Anglo American sees exports drop from Kumba: Anglo American, another global mining major, saw iron ore output from Kumba in South Africa dip a slight 2% y-o-y to 9.27 mnt in Q1CY'24, largely driven by the reconfiguration of the mine to align production with lower third-party rail capacity and ease stockpile constraints. Production at Kolomela decreased 12% to 2.7 mnt. However, output increased 4% at Sishen to 6.5 mnt. Overall, output rose 10% q-o-q but exports from Kumba fell 12% in Q1 y-o-y and 10% q-o-q amid equipment challenges at the Saldanha Bay Port as well as adverse weather conditions.
  
  

Outlook

Major global miners have kept their production guidance intact. Hence, volumes may remain on the higher side this calendar. Exports from India too may increase. But, rising stockpiles at Chinese ports are a concern - these being at a two-year high of 145 mnt.