Hedland hits new high

Iron ore shipments from Australia’s Port Hedland jumped nearly 30% last month, extending the three month streak of all-time highs.

Exports from the world’s largest bulk export terminal surged to 36.1mt from 27.9mt in May 2013, figures from the port authority show.

Shipments to China were a record 29.9mt in May up 28% year-on-year. Shipments to China have surged 36% to 130.5mt in the first five months of 2014.

In the year-to-date iron ore exports from Port Hedland reached 161mt, 34% higher than the same period in 2013, according to port data.

 “While the expansion of Australian iron ore projects is putting pressure on the iron ore price, we see the combination of larger Australian volumes coupled with increase in Brazilian volumes in the second half of 2014 as creating a solid groundwork for capesizes,” said Arctic Securities analyst Erik Nikolai Stavseth.

Clarkson Capital Markets’ Urs Dur agreed saying that he continues to expect that declining spot iron ore pricing could result in increased Chinese imports, supporting capesize freight rates.

“From a valuation perspective, we maintain that several dry bulk stocks are trading to a discount,” Stavseth said in a note to clients.

“We are fully aware of the recent stalling of asset values, but argue the implied prices suggest a relatively sharp decline in asset values.”

BHP Billiton and Fortescue Metals Group (FMG), Australia’s second and third largest iron ore producers respectively, both use Hedland to ship iron ore.

Nearly all of Australia’s near 400mt of iron ore exports are shipped from Port Hedland and the neighbouring Port of Dampier.

Both BHP Billiton and FMG are expanding supplies, betting that increased volumes from low-cost mines will more than offset declining prices.

China, which imports close to 60% of the global seaborne iron-ore, imported a record high 820mt last year.