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Record Iron Ore Shipment Leaves Australia for China

The largest shipment of iron ore ever amassed by a private company in Australia left Port Hedland for China on Sunday, June 9th. The extremely valuable commodity was loaded on to the PSUIron Ore Ship Seventh, a ship designed to carry raw materials.

256,450 tons of the product that can be turned into steel filled every storage nook and cranny of the big ship as it moved slowly out of port into open seas. The previous record for tonnage of iron ore carried by this very reliable ship was achieved on April 26th, just over a month ago, when the company mining the ore, Fortescue, loaded 255,816 tons of iron ore onto the PSE Seventh.

The news is both good and bad for Fortescue, for ordinary Australians and for the country's national economy.

Big orders, such as the one described here, helps Fortescue build revenue and income and it keeps employees on the job. The bad news is that, there has been a month-long slide in the price of iron ore in Australia.

The precipitous drop in the price of a single ton of iron ore is likely to have compelled Chinese companies to jump at the opportunity to purchase large quantities of the precious raw material. At the same time,the dramatic reduction in the value of the Australian dollar may have prompted executives at Fortescue to seek buyers for their product so that they could sell it, as much as possible, before the plummeting value of the dollar cuts even more deeply into company profits.

Analsyts in the "down under" country see "truth" in both explanations. The deep discount in the price of iron ore apparently has made large purchases irresistible while the falling dollar has created a sense of urgency among Australian mining companies like Fortescue.

It may also be why shipments to China of iron ore rose by more than twenty one percent in May, well above what was sold and shipped in April. What's more, the actual amount of tonnage shipped to foreign customers like those in China reached an impressive 23.3 million tons in May while it topped out at only 19.3 million tons in April.

There is no doubt that executives at Fortescue would like to earn more per ton sold than they are able to get right now. However, four years of a weak global economy have made any sale one that is worth getting.

It is very likely that miners and others in the employ of Fortescue share that opinion. They hope, as well, that China's appetite for Australian raw materials continues unabated in the short-and-long-term future.

If prices remain low, that is almost certain to happen.

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