Rio Tinto must raise iron ore export to meet guidance

UK-Australian mining firm Rio Tinto needs to significantly ramp up exports to meet the bottom of its guidance for 2021, after a weak July that contributed to below average shipments from the Pilbara region of Western Australian (WA) across the month.

The four largest WA producers — Rio Tinto, BHP, Fortescue and Roy Hill — loaded vessels with a combined 17.24mn deadweight tonnes (dwt) of capacity in the week to 31 July, up from 17.24mn dwt in the previous week and 1pc below 12-month average levels. Rio Tinto shipped 10pc below average, continuing a difficult period for the firm operationally, according to initial shipping figures compiled by Argus.

Rio Tinto warned last month that it expected shipments to come in at the bottom end of its 325mn-340mn t for 2021, but this would require a significant ramp up in output over the next five months. The firm shipped 154.13mn t in January-June, leaving it with a target of 170.87mn t for July-December or an average of 28.5mn t/month, which is roughly what it achieved in July-December 2020.

July shipments from Rio were closer to 25mn t, down from around 28.5mn t in July 202, and at the lowest level since February, according to initial shipping data. This is despite the restart of the 45mn t/yr East Intercourse Island on 26 June following five weeks of maintenance.

Rio Tinto loaded ships with 5.88mn dwt capacity in the week to 31 July, down from 6.44mn dwt in the week to 24 July, and 10pc below its weekly rolling average over the past year of 6.56mn dwt. This was offset by strong shipments from Fortescue, up to 4.11mn dwt from 3.76mn dwt and 15.5pc above its average of 3.56mn dwt.

Roy Hill loaded 1.16mn dwt, up from 1.01mn dwt in the week to 24 July and 1pc above its rolling average of 1.15mn dwt. BHP loaded vessels with 5.7mn dwt capacity in the latest week, down from 6.04mn dwt the previous week and 1pc below its average of 5.75mn dwt.

The deadweight tonnage is the maximum capacity of the vessel and overestimates actual shipments by around 5pc.

China was listed as the destination for 77pc of shipments in the latest week, up from 76pc a week earlier. After including shipments with unconfirmed destinations — most of which are probably headed to China — the percentage was 80pc, down from 81pc a week earlier and below the recent average of around 82pc.

Argus assessed the ICX iron ore price at $184.25/dry metric tonne (dmt) cfr Qingdao on a 62pc Fe basis on 3 August, down from $220.50/dmt on 19 July and a high of $235.55/dmt on 12 May. The most recent assessment was up from $167.45/dmt on 1 April and $159.90/dmt on 31 December. Argus assessed 58pc Fe at $148.05/dmt cfr Qingdao, down from $183.35/dmt on 19 July and a high of $207.10/dmt on 12 May but up from $138.30/dmt six months earlier.

By Jo Clarke

Western Australia iron ore loadings mn dwt

Iron ore prices $/dmt