Basic Materials Global Iron Ore Tracker – April: Brazil shipments start to recover

Iron ore shipments from key producers in Australia, Brazil & South Africa improved in March. We see 2 key risks near-term 1) blast furnaces outside China are being curtailed 2) iron ore shipments seasonally lift from April.

05 May 2020

Monthly iron ore shipments from Australia, Brazil, South Africa (Mt)

Source: UBS Evidence Lab, Thompson Reuters, Brazil MDIC, South African SARS, Marine Traffic, UBS

This line graph shows monthly iron ore shipments from Australia, Brazil, and South Africa in 2017, 2018, 2019, 2020.

Australia (AU), Brazil (BR), South Africa (SA) shipments lift in April; AU still strong, BR starting to recover

Iron ore shipments from key producers in AU, BR & SA are up +9% year over year in April (daily rate +5% month over month) with AU +10% year over year & BR +21%, while SA is -43%. Iron ore prices have held up in 2020 as fundamentals are robust, with Chinese demand strong (pig iron +2.4% year to date) while supply is soft (shipments -2% year to date); in China iron ore inventory at ports & in vessels outside ports as well as steel inventory is still falling. We see 2 key risks near-term: 1) blast furnaces outside China are being curtailed; 2) iron ore shipments lift seasonally in May/ June. We expect iron ore prices to trend down to the marginal cost of ~$65/t over 18m.

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