Port Hedland iron ore port reopens: Update

Adds comments from Fortescue, BHP and Rio Tinto and latest shipping information in paragraphs 3-4

The first vessels have entered Western Australia's (WA) largest iron ore export port at Port Hedland but Port Dampier and Cape Lambert remain closed for a sixth day, as ex-Cyclone Veronica continues to track southwest along the Pilbara coast.

Three bulk carriers, including the FMG Matilda, which is owned and operated by Australian producer Fortescue Metals, were guided into the port today at 3:30pm WA Standard Time (WAST) (04:30 GMT), with many others waiting to enter now that ex-Cyclone Veronica has cleared the port.

There is still some localised flooding around Port Hedland, which has affected Fortescue's rail line, with the firm still assessing the situation to see how to best mitigate the impact. Fellow producer BHP has not yet commented on the state of its railway at Port Hedland.

BHP expects to start loading ships today with production ramping up over the next few days. The cyclone largely dumped heavy rain along the coast between Port Hedland and Dampier, with most mines, other than Rio Tinto's Robe Valley mine, further inland and out of the way of the worst of the downpours and related flooding.

Port Hedland has ample stocks and will be able to load from those for a short while before rail deliveries resume.

Port Hedland was the last of the three ports to close, continuing to load ore into the afternoon of 21 March after Dampier and Cape Lambert had sent all vessels out to sea that morning.

Cyclone Veronica has eased to a tropical low from a category four cyclone and has moved southwest of Dampier and Cape Lambert, which are both used by Rio Tinto to export iron ore. Both ports remain closed at 3.30pm WAST, with vessels starting to move back towards the anchorages for both ports.The firm expects staff to return to its port and rail operations today, with normal operations resuming once it is safe.

The cyclone also caused Rio Tinto to yesterday suspend operations at its Robe Valley mines at Pannawonica, but is starting to resume mining today, as the storms ease.

The firm shipped 22.8mn t of Robe Valley fines and 9.21mn t of Robe Valley lump in 2018 compared with 21.14mn t and 9.84mn t respectively in 2017. Robe Valley fines compete with grades such as Yandi fines and fellow Australian producer Fortescue's blended and SSF fines in the low-grade ore category. Rio Tinto is preparing to update the market on the status of its Pilbara operations.

Chinese firm Citic's 24mn t/yr Sino Iron magnetite project is also experiencing gale force winds and heavy rain, which are forecast to intensify over the rest of the day and into tomorrow.

Port Hedland is the largest iron ore exporting facility in Australia, serving BHP, Fortescue as well as the privately owned Roy Hill. Port Hedland exported an average of 1.39mn t/d in 2018. The port has been out of operation for nearly five days because of the cyclone, which could remove around 7mn t of iron ore shipments from the market.

Port Dampier and Cape Lambert are solely used by Australia's largest iron ore exporter Rio Tinto, which is aiming to ship at an average rate of around 950,000 t/d from Australia. A five-day closure at these two ports could remove nearly 5mn t of iron ore from the seaborne market, with the probability now that these ports may be closed for around six days.

Tropical cyclones are a regular occurrence in this region of WA and all the firms include them in their planning. This cyclone is more disruptive than most over the past few years but it comes in an otherwise mild cyclone season.

Lost tonnage in the market could be more disruptive than usual because it comes amid uncertainty about Brazilian supplies following the Feijao tailings mine collapse that has forced mining firm Vale to close around 90mn t/yr of capacity, including the 10mn t/yr Alegria mine that it suspended last week.

The Argus ICX 62pc index eased slightly to $85.10/dry metric tonne (dmt) yesterday from $85.55/dmt on 22 March.