The four biggest Western Australian (WA) iron ore mining firms are gearing up for shipments of over 75mn t in June, capitalising on debottlenecking achieved in 2019 and a strong price environment caused by disruptions to shipments from Brazil.

 

June is a big month for WA iron ore exports, as mining firms BHP and Fortescue Metals push to export more ore ahead of the end of their financial year, and Rio Tinto and Roy Hill seek to catch up on shipments missed as a result of the November-April cyclone season. Total shipments from the four firms passed 75mn t in June last year and are expected to surpass that level this month, assuming no adverse weather conditions.

 

Fortescue has to push hard this month to meet its revised guidance of 175mn-177mn t for the year to 30 June, having shipped 157mn t in July-May, according to estimates based on initial shipping data collected by Argus. This leaves it with 18mn-20mn t to ship in June, which is more than the 16.7mn t record it set in June 2019.

 

BHP can easily hit the bottom of its guidance of 273mn-286mn t for the 2019-20 fiscal year but likes to aim for the top. It could even beat guidance after it spent much of October upgrading its port facilities at Port Hedland. The firm's management has said that it is ready to scale up production quickly should the market require, which may be now given the continued strong demand from China, combined with Covid-19-related disruptions to shipments from Brazil. BHP has already started consulting on plans to increase production to 330mn t/yr and has approvals in place to reach 290mn t/yr.

 

Rio Tinto's financial year is the calendar year, so it does not have the same reporting pressures in June, but it has the same market incentives as BHP and Fortescue. It was forced to revise down its guidance in February following Cyclone Damien and had a tough January-March. But it had a stronger April-May, despite repairs to port facilities, and also has spare capacity to meet market demand.

 

Roy Hill is a private firm with no reporting pressures, but it has been debottlenecking its 55mn t/yr operations and aiming for 60mn t/yr. It had a strong May, shipping at around 66mn t/yr, although this followed a weaker April when it shipped around 40mn t/yr. It too will be looking to capitalise on the current market conditions.

 

Argus last assessed the ICX price at a 10-month high of $101.05/t cfr Qingdao for 62pc Fe fines yesterday, up from $83.65/t at the beginning of May.

 

Source: Argusmedia