RIO delivers bad news to the iron ore market

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RIO is out with its first quarter production report and it is not good news for the iron ore price:

 Pilbara iron ore shipments were 76.7 million tonnes in the first quarter (100 per cent basis). Ship loading was impacted by cyclone activity during the period, and sections of the rail network were affected by significant rainfall. Despite these disruptions, shipments were in line with the first quarter of 2016 and guidance for 2017 remains at 330 to 340 million tonnes.

To meet that guidance last year shipped 82.2mt, 80.9mt and 87.7mt in the next three quarters. In other words over the next three quarters it will have to accelerate shipments at an annualised rate of 30mt. Given Port Hedland Q1 shipments were down 44mt Dec to Jan QTRs, the acceleration of Australian shipments over the next three quarters is the equivalent of 75mt of new iron ore over the remainder of the year from Q1.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.