Rio Tinto retained its top ranking in the global iron ore export stakes – by the narrowest of margins in the three months to June – just 200,000 tonnes.
June quarter reports from the three of the world’s four biggest iron ore miners and exporters – Vale, Rio Tinto and BHP – show that Vale, the big Brazilian miner, continues to recover from 2020’s problems while Rio Tinto lost momentum and BHP remained solid.
The fourth group, Fortescue Metals, is due to release its June quarter and 2020-21 production and sales data next week, a day after Rio releases its interim results on Wednesday and a profit estimated to be around $US10.9 billion, according to some forecasts.
The quarterly reports from BHP, Rio and Vale had no impact on iron ore prices which are down 15% so far this week in what is starting to look like a sell-down because Chinese steelmakers mills feel they are now well-supplied.
Indeed, there are suggestions an oversupply is emerging in China with a reported 127 million tonnes of iron ore stocks at portside and an expected jump in shipments this month.
Driving the rising pace of supply is the improvement in the performance of Vale which seems to have shaken off its weak operational efforts of the past two years.
Vale said it produced 75.7 million tons of iron ore in the June quarter, up 12% from the same quarter in 2020 and 11.3% above the March, 2021 quarterly figure.
That was by far the strongest performance of the big three miners in the three months to June.
Vale kept its iron ore production guidance for 2021 unchanged at 315 million-335 million tonnes, despite the 11% plus improvement in the first half of the year.
This compares with production of 300.4 million tonnes in 2020. Vale expects its production capacity to grow to 350 million tonnes a year by the end of this year, the company said on Tuesday and reaching 400 million tonnes by the end of next year.
Last week, Rio Tinto reported a 9% drop in June quarter iron ore production to 75.9 million tonnes due to above average rainfall in the West Pilbara, shutdowns to enable replacement mines to be tied in, processing plant availability, labour problems and cultural heritage management.
Iron ore shipments fell 12% in the June quarter to 76.3 million tonnes.
Due to this underperformance, Rio Tinto now expects to ship near the lower end of its range of its previous guidance of 325 Mt to 340 million tonnes in 2021. production for the six months to June totalled.
BHP’s iron ore production was down 2% year over year to 65.2 million tonnes for the June quarter.
On a sequential basis, production improved 9% from the March quarter primarily due to improved performance in the Pilbara.
BHP says it is looking at producing between 249-259 million tonnes of iron ore in 2021-22.
In the first six months of 2021, Rio Tinto was still tops, producing 152.3 million tonnes in the first six months of the year (and sold 154.1 million).
Vale produced 143.7 million tonnes and sold 126.5 million tonnes (up more than 20% from a year earlier’s 106.27 million tonnes). Vale sold another 13.9 million tonnes of pellets, down from 14.26 million a year earlier.
BHP was third produced 125.1 million tonnes in the six months to June 30, with sales totalling 139.7 million tonnes (on a 100% basis including the share of partners) or 123.779 million tonnes for BHP itself.
BHP production and sales will fall in the current quarter because of what the miner a “major maintenance” campaign over the next three months at Port Hedland, its key iron ore export facility in Western Australia.
It’s clear that barring problems in Brazil, Vale will pass Rio Tinto on a quarterly basis later this year, especially with more reports from China this week of second half production limits being imposed to cut output.
Those reports have seen prices slide 7% in the past four trading sessions with the price of 62% Fe fines delivered to northern China ending Thursday at $US202.63.
That was a three-week low and down $US12.16 in the session and $US18.80 or more than 7% since last Friday.
Some steel producers in China’s Jiangsu, Fujian and Yunnan provinces have been told to cut production as the country aims to keep its annual output no higher than the 1.065 billion tonnes in 2020. Output in the first six months of 2021 was well ahead of the 2020 annual rate.
The price of 62% Fe fines is now more than $US35 or nearly 15% under the all time high in mid-May of just over $US237 a tonne.
A further selloff in the price can’t be discounted.
