The iron ore price might be rising, but shipments of Australian iron ore continue to make records.
Iron ore shipments through Australia's largest loading terminal – Port Hedland – continue to rise strongly, hitting 39.4 million tonnes in May and above 450 million tonnes for the past 12 months.
That's the third-highest monthly total on record and the highest annual total ever recorded.
And most of that goes to China, with Korea and Japan the two other major destinations for iron ore.
Australia's three largest iron ore miners Rio Tinto Limited (ASX: RIO), BHP Billiton Limited (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) all ship their ore through Port Hedland.
Iron ore prices are however not showing any signs of wilting in the face of record imports into China, rising 2.8% overnight to US$52.54 a tonne. It's the third consecutive day of rising prices, and the commodity has now risen 8.8% over those three days.
The price is still a fair way off the peak of US$70 set in April, but that was probably driven more by speculative activity in the futures markets than any real indicator of demand and supply.
Rio Tinto is targeting production of between 330 and 350 million tonnes in 2016, after producing 327.6 million tonnes (263 million was Rio's share) and shipping 336.6 million tonnes in 2015. The miner says it has the capacity to produce 360 million tonnes but is unlikely to hit that level.
BHP Billiton is expected to ship 260 million tonnes in the 2016 financial year (FY16), after producing 254 million tonnes from its Western Australia Iron Ore (WAIO) operations. Its joint venture Samarco operation with Vale has been put on hold following the tailings dam collapse.
And Australia's third largest miner Fortescue is targeting 165 million tonnes for FY16, but could exceed that level.
Hancock Prospecting's Roy Hill is ramping up to 55 million tonnes of annual production after starting in December 2015, and expects to reach that target by the end of this year.
Foolish takeaway
Higher-cost production needs to exit the market or demand needs to rise or else the iron ore price won't stay at these levels for much longer. The only problem with that is demand is unlikely to rise given the glut of steel currently being produced.
