Daily iron ore price update (Goan delays)

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Here are the iron ore price charts for April 23, 2014:

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More paper market weakness though tailing off. Rebar futures managed another small bounce. Physical too is eroding but the Baltic Dry capesize component is up another 3%, and is not at rock bottom levels, suggesting buyers are around.

The news of week is get more textured too with India’s return to exports not imminent. From Bloomie:

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“The Supreme Court order is too little too late,” said Fonseca, referring to the 20 million tonne-a-year mining cap imposed by the top court. The threat of job cuts still looms large and we have to remain eternally vigilant to protect workers’ interests.

Sesa Sterlite Ltd, the biggest miner in the state, dropped as much as 1.4% to Rs.198.75 in Mumbai, reversing a gain of almost 5% after the court’s order on Monday. The shares traded at Rs.199.10 as of 9:53am local time.

Kishore Gadekar’s 10-tonne rusting truck sums up the problem for workers and mining companies such as Sesa Sterlite Ltd., once India’s biggest iron ore exporter, and Fomento Resources Group.Gadekar’s truck hauled ore until it rolled to a halt when the ban was imposed in October 2012, along with about 18,000 other vehicles in the industry….

“About 300 barges, used to carry the ore from jetties to larger ships, are also lying idle, their owners trying to fend off lenders,” said Atul Jadhav, president of Goa Barge Owners’ Association.

“Restarting the mines would just be a first step, according to P.K. Mukherjee, Sesa’s former executive director. The next would be trying to win back customers, who now buy more iron ore from Australia and Brazil.

“Our longstanding customers have readjusted their blast furnaces to a different mix of iron ore,” Mukherjee said in an interview last month, weeks before leaving the company. “To win them back would require an unreasonable price discount,” he said.

Monsoon begins in six weeks so the return of Indian ore is looking like a 2015 story. Goan ore sits on the cost curve somewhere between $50 and $60 depending upon who you ask, just above Fortescue. So you have to ask exactly how long it would survive after returning.

With the Baltic Dry warming a little and Chinese infrastructure spend rebounding, I would not be surprised to see the iron ore price trade sideways for a while, so long as steel prices do not keep falling away.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.