Why China is important to the dry bulk shipping industry (Part 9 of 9)
The Hedland Port in Australia
The Hedland Port is one of the major exporting ports of iron ore. It occupies about a fifth of the global seaborne market for iron ore. Located in the Pilbara region of Western Australia with a population of approximately 14,000, it’s the largest port, exporting some 277 million dwt (deadweight tonnage) of raw material in 2012. Of that 277 million dwt, iron ore held the biggest share of approximately 239 million dwt.
Continuous increase in iron ore exports
In August, the Hedland port exported a total of 27.4 million mt of iron ore. This was an increase from 26.6 million tons in July and 22.8 million tons in August 2012. Shipments to China, the biggest buyer, increased from 20.3 million mt in July to 22.3 million mt. Last year, exports to China amounted 16.7 million mt. So on a year-over-year basis, export volume to China grew 33.5%, while Hedland Port’s total export volume rose 20%. August’s increase is a sign of Asia’s demand for iron ore.
Expect 2014 to be a solid year
The Hedland port is used by BHP Billiton, Fortescue Metals Group, and Atlas Iron to ship iron ore cargoes. With BHP Billiton and Fortescue Metals Group expected to significantly increase iron ore production capacity in 2014, these mega producers are expected to gain share in the world’s iron ore market, which is positive for DryShips Inc. (DRYS), Diana Shipping Inc. (DSX), Safe Bulkers Inc. (SB), Navios Maritime Partners LP (NMM), and Navios Holdings Inc. (NM) over the long term.
Rio Tinto will support near-term rates
In related news, Rio Tinto, which owns ports in the same region, has successfully increased its iron ore capacity from 239 million mt a year to 290 million mt. On September 2, the first ship was loaded with iron ore from its expanded port, railway, and mine operations. The latest increase in Capesize rates reflect this development, and we should expect demand for Capesize ships to run high as Rio Tinto begins capitalizing on the newly expanded capacity.
Browse this series on Market Realist:
- Part 1 - Why China’s industrial activity is important to dry bulk shippers
- Part 2 - A jump in crude steel output is positive for dry bulk shippers
- Part 3 - Building sales cool, next month’s data big for dry bulk shippers
- iron ore