BHP Billiton, Rio Tinto and Fortescue are in no rush to change iron ore balance – by James Thomson (Australian Financial Review – July 17, 2016)

It’s highly likely that Fortescue Metals Group will be the only one of the Big Three iron ore players to beat its production target this week when BHP Billiton, Rio Tinto and the Third Force present their numbers for the June quarter.

We already know that FMG has eclipsed its annual 2015-16 target of 165 million tonnes, with shipments hitting 169.4 million tonnes during the period. We also have a fair idea, from data from the Port Hedland port authority, that BHP missed its shipping target of 260 million tonnes for 2015-16, and is likely to report around 258 million tonnes.

Rio Tinto expects to ship 350 million tonnes out of the Pilbara and its Canadian operation in the 2016 calendar year. It’s on track to meet the target, but Macquarie says it will still need to strong finish to the year.

It’s worth noting that both BHP and Rio did downgrade some of their targets in April during the year for various reasons; Rio cut its 2017 target to 330-335 million tonnes due to issues with its AutoHaul driverless train system, while BHP’s original 2016 target was 10 million tonnes, higher, but it decided its rail infrastructure needed maintenance.

The truth is, the big two have no reason to rush to towards higher production levels given iron ore appears to finding a floor at a price that is pretty comfortable for the majors. And as FMG chief Nev Power tells The Australian Financial Review on his anniversary of five years in the job, FMG won’t be beating its 160 million target by much than a few percentage points any time soon either.

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