[REPORT] Port Hedland Sets New Record with 1.2M Tons of Iron Ore in Single Tide
The largest iron ore port in Australia, Port Hedland, has set a new record. Over the weekend the port shipped 1,270,721 tons of iron ore in a single day, breaking the previous record by more than 160,000 tons.
The new benchmark was accomplished with seven capsize bulk carrier ships all departing on Saturday. The port said it was the first time seven capsize vessels have sailed on a single tide.
According to Treasurer Joe Hockey, the recent fortune of good weather has played a significant role in the high volume of iron ore exports leaving Australia. "It's an extraordinary quarter in March when you don't have cyclones, particularly in Western Australia affecting Port Hedland, so our miners are exporting their socks off, and thank God because it's having a positive impact on our economy," Hockey said.
The record breaking volumes of export are also playing a critical role in Australia’s economy. The market price of iron ore has been on a downhill spiral in recent months, meaning larger mining companies such as BHP Billiton and Fortescue Metals need to ramp up production volumes to maintain profit margins.
The port has increased exports by 3.55 percent between April and May, setting a monthly record of 36 million tons. The value of iron ore exports is expected to reach $76.8 billion in 2014, up from $57.1 billion according to the Bureau of Resources and Energy Economics.
Last month Port Hedland faced an uncertain outcome as a possible strike with tugboat workers loomed over Australia’s largest port.
Copper, iron ore surge as Chinese investors unleash demand
The reopening of major industrial economies is sparking a surge across commodities markets from corn to lumber, with tin climbing above $30,000 a tonne for the first time since 2011 on Thursday.
In the wake of mounting evidence of inflation fuelled by higher raw materials prices, investors are also increasingly focused on when the U.S. Federal Reserve might start throttling back its emergency support.
Many banks say the rally has further to run, particularly for copper, which will benefit from rising investment in new energy sectors. Copper is at the highest in a decade, fueling bets it will rally further to take out the record set in February 2011. Steel demand is surging as economies chart a path back to growth just as the world’s biggest miners have been hampered by operational issues, tightening ore supply.
“The long-term prospects for metals prices are ‘too good’ and point to higher prices in the next few years,” said Commerzbank AG analyst Daniel Briesemann. “The decarbonization trends in many countries, which include switching to electric vehicles and expanding wind and solar power, are likely to generate additional demand for metals.”
Trading house Trafigura Group and several major Wall Street banks including Goldman Sachs Group Inc. and Bank of America Corp. expect copper to extend gains.
Copper rose as much as 1.6% to $10,108.50 a ton on the London Metal Exchange before trading at $10,080 as of 4:07 p.m. in London.
Benchmark spot iron ore prices rose to a record, while futures in Singapore and China climbed.
The boom comes as China’s steelmakers keep output rates above 1 billion tons a year, despite a swath of production curbs aimed at reducing carbon emissions and reining in supply. Instead, those measures have boosted steel prices and profitability at mills, allowing them to better accommodate higher iron ore costs.
Spot iron ore with 62% content hit $201.15 a ton on Thursday, according to Mysteel. Futures in Singapore jumped as much as 5.1% to $196.40 a ton, the highest since contracts were launched in 2013. In Dalian, prices closed 8.8% higher.
Erik Hedborg, Principal Analyst, Steel at CRU Group commented: “Recent production cuts in Tangshan have boosted demand for higher-quality ore and prompted mills to build iron ore inventories as their margins are on the rise. Iron ore producers are enjoying exceptionally high margins as well, around two thirds of seaborne supply only require prices of $50 /dmt to break even.”
Still, some analysts including Commerzbank’s Briesemann expect a short-term correction as metals become detached from fundamentals. There’s also a risk that China could engage in policies that may cool demand for iron ore and copper.
The metals rally has boosted concerns about short-term Chinese demand. Some manufacturers and end-users have been slowing production or pushing back delivery times after costs surged, while weaker-than-expected domestic consumption has opened the arbitrage window for exports.
Tin climbed as much as 2% to $30,280 a ton on the LME, boosted by rising orders for the soldering metal. Tin is at the highest since May 2011, with a 48% gain this year making it the best performing metal on the LME.