Brazil’s impact on dry bulk
Brazil accounts for ~25% of the market share of global iron ore trade volume. It’s the second largest iron ore exporting country. Brazil has one of the largest mining companies—Vale.
Shipments from Brazil are a key metric for investors to watch. Higher export volumes have a positive impact on shipping rates. Shipping rates are a critical variable.
The rates move dry bulk shipping companies’—like DryShips Inc. (DRYS), Diana Shipping Inc. (DSX), Navios Maritime Partners LP (or NMM), Navios Maritime Holdings Inc. (NM), and Safe Bulkers Inc. (SB)—revenues, earnings, cash flows, and share prices. The Guggenheim Shipping ETF (SEA) tracks these companies.
September is on a roll
For September, Brazil’s total iron ore shipments surged 17.04% year-over-year (or YoY) to $33.08 million tons. On a quarter-over-quarter basis there was a 14% increase compared to September 2013. This is according to the data released by the Brazilian Ministry of Development, Industry, and Foreign Trade.
For January through August, the combined iron ore exports from Port Hedland and Brazil suggested a massive 102.4 metric ton increase—compared to the same period in 2013. The total is 490.4 metric tons.
In September, Brazilian iron ore exports increased to their highest level since December 2011. The iron ore exports were 33.1 metric tons in September. According to official data, the exports were up 4.1 million tons compared to September 2013.
Meanwhile, total iron ore shipments from January through September were 249.3 million tons. This is up 14.9 million tons compared to the same nine months last year.
Moving forward
The latest estimate for Brazil’s iron ore exports was provided in September. Brazil’s iron ore exports are expected to increase 10% to 362 million tons this year. Also, in the medium term, Brazil’s exports are projected to average 6% growth. The exports should increase to 489 million tons by 2019.
For the short and medium term, iron ore imports from Australia and Brazil are expected to fill a greater share of China’s domestic iron ore requirements.
Click here to learn more about China’s iron ore inventory.
Source: Market Realist
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