Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Tuesday, 12 July 2016

Port Hedland record throughput

Thunderous results from the Port of Port Hedland, which racked up record throughput in June (42.2Mt) including record iron ore cargo shipped (41.8Mt).

On both metrics volumes were up by 9 per cent from one year ago.

85 per cent of that iron ore cargo was bound for China and Taiwan.

Pilbara Ports also reported record annual throughout for the financial year to June 2016 of 633.5Mt, with the Port of Port Hedland also reporting a record of 460.4Mt.

Despite this unprecedented volume of supply, iron ore prices have been up very strongly this year to around US$55/t.

But with Gina Rinehart's Roy Hill Holdings mine now having come online, stronger prices seem unlikely to persist for too long.

Roy Hill iron ore exports were seen to be a significant factor in increased supply in the second quarter of 2016.

Indeed on this evidence there will be serious downward pressure on the price in the second half of 2016, probably sending the spot price below US$50/t.

Australia is capturing a huge share of the market, with the Port Hedland iron ore figures pointing to a solid increase in volumes in the second quarter of 2016.

Coal exports have been floundering, however.

Fortescue Metals Group (FMG) yet again saw its share price leap another 5.44 per cent yesterday to close at $4.07, equating to a market capitalisation of more than $12 billion.

The iron ore producer has seen its share price soar from well below $1.50 in January. 

Deeply, deeply unpleasant if you went short!