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Friday, 5 February 2016
Cyclone Stan was a "fizzer"
Cyclone Stan says g'day
According to the Bureau of Meteorology (BOM) since 1910 there have been 49 cyclones affecting Port Hedland, which averages out to about one every couple of years.
There was a stroke of luck last week for the big boys of iron ore production (Rio Tinto, BHP Billiton, Fortescue Metals) as ex-tropical cyclone Stan ripped through without causing excessive disruption.
Hold on to your hats
The BOM had warned that winds could tear as high as 180 kilometres per hour, requiring that equipment be strapped down and sites evacuated.
The Pilbara Ports Authority announced that for safety purposes the port of Port Hedland was closed from just after 11am last Friday morning for a total of only 48.8 hours, and the outer anchorages were shut down for 65.8 hours.
At the Port of Dampier, from which Rio Tinto ships its iron ore, the inner anchorages were closed for 45 hours, outer anchorages were shut for 57 hours, and port waters for 36 hours.
The nearby Port of Ashburton was left unaffected by the cyclone.
In this cost-conscious industry where every hour counts, all things considered this was a relatively good outcome compared to what might have been.
Fortunately for the mining community by Sunday morning Stan had dedided to break inland, and the cyclone was downgraded to a Category 1 event.
Locals to the Pilbara region, some of whom even look forward to a good cyclone (not least for the heavy rain which they can bring) described the Cyclone downgrade as "a fizzer".
Exports slowed in January
Iron ore exports for the month were knocked down to 34.1 million tonnes (Mt), which was 8 per cent lower than the figure achieved for January 2015.
Although the mining mavens put a positive spin on the result pointing to massive volumes in December (arguably a fair point, given that it is the month of the Christmas break), as you can see in my chart below this was nevertheless the slowest month for iron ore cargoes shipped since June 2014.
In truth the previous month's figures were a record for any December, pumped up by the first iron ore cargo shipped from Gina Rinehart's flagship Roy Hill project.
Although Roy Hill made no contribution in January, as 2016 rolls on we can expect to see exports ramping up.
The Port of Dampier's monthly throughout declined by only 1 per cent from the prior year.
Price action has been understandably underwhelming in the face of such an enormous ramp up in export volumes from countries such as Australia.
The spot price for iron ore has rebounded by nearly 20 per cent to above US$45/tonne since the second week of December, while some higher cost producers globally have been forced to make cutbacks.
That said, ANZ's outlook sees the iron ore price reverting back towards $35/tonne within the next two months.