High levels of activity at ports in Western Australia might help to explain the recent rally in iron-ore prices, one of Asia Pacific´s largest brokers said.
Citing its own proprietary port data, Macquarie said gross shipments of iron ore from WA had recovered over the past three weeks to close to their early-July peak of about 840mtpa (on a six week rolling average), after plumbing a recent low of approximately 800mtpa.
Nevertheless, those shipping rates were not the only factor to take into consideration. Other drivers of the iron ore price were shipping rates from Brazil and the position of the Chinese Steel iron-ore inventory cycle, both of which could have as big an influence as the WA data, the analysts said in a research report published on 31 August.
Over the past three weeks the average daily shipping rate was 870mtpa, while Macquarie was projecting an average rate of 860mpta, suggesting some “downside risks” to our forecasts.
Macquarie was expecting 874.7mtpa of Australian iron ore shipments for calendar year 2017 and warned that even if prices remain at $50 per metric tonne smaller or higher cost producers would still be at risk and might not be sustainable.
“Smaller or higher cost producers account for over 60mtpa of our ~900mtpa (for calendar year 2018) forecast and remain at risk both and may not be sustainable even if iron-ore prices remain around US$50/t.”
The broker reaffirmed its view that prices should stabilise closer to $50 per tonne in 2017.
Source: Digital LookPrevious Next