Iron ore price

Viewing posts in the Iron ore price category

External shock as I wave you goodbye!

imgres Rebar futures are down 60 points or 2.2% to 2716 today and Dalian iron ore ore futures are down 17 points or 3% to 576. These are big moves and markets have closed almost on their lows. From Reuters: "There is no sign that demand for steel can improve in the short term," said Cao Bo, analyst at Jinrui Futures in Shenzhen, citing the prolonged weakness in China's housing sector. China's home prices fell for a fourth straight month in August, data showed on Thursday, pointing to a deepening downtrend in the country's property market that is weighing on the broader economy. Real estate, along...
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Another iron ore junior bites the dust

imgres From Yahoo: Economic factors have been blamed for shipments from Iron Ore Holdings' Iron Valley project in the Pilbara being pushed back. Project partner Mineral Resources has told IOH of the delay in trucking and shipping ore from this month to early in the last quarter of calendar 2014. IOH said Mineral Resource had advised it was making all reasonable efforts to facilitate profitable trucking and shipping of Iron Valley products, subject to further movements in commodity prices and exchange rates. The miner said the market conditions demonstrated one of the key benefits of its proposed...
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Fortescue & Atlas break down as Chinese futures blasted

.oin Another bad day for miners despite the falling Australian dollar. Fortescue and Atlas have both broken support and are at 2014 lows: Goldman slapped a 4o cent price on AGO this morning so maybe that did it. Arrium is still selling as well but MGX has a bid because it's about to go ex-dividend and the yield is a cool 10%. Not enough! Here are the up to date relative performance charts with juniors converging on zero: The majors are down 1% today but are still doing superbly in the circumstances: Thus the idiocy spread is intact: And the cause of today's carnage? Chinese markets...
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Vale building an edge over Fortescue?

imgres See above a new CNBC video that makes an important point I've been driving home for readers. Now that iron ore has become a battle for market share, it is the relative competitiveness between companies that matters not a simplistic assessment of a falling dollar equals higher profits. Here is the UBS all-in  break even chart for the cost curve: FMG must get below Vale or others or it will be the one cutting production once the juniors die. This is another reason why it is Australia that must address its competitiveness across the board and not wait for the US Fed to do it for us by...
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Moodys warns on iron ore fallout

imgres From Moodys: Iron ore, Australia’s largest export commodity by value, has been experiencing sharp  price declines since the start of 2014 due to large increases in supply and lower growth  rates for steel production in China. Overcapacity has grown on the Chinese Mainland as  GDP growth slows. The current price of around USD84 per metric tonne (mt) for 62%  Fe iron ore CFR is down over 35% from the beginning of 2014. » This trend will exert a direct negative impact on Moody’s rated Australian producers  over the next 6-12 months. Atlas Iron Limited’s (B2 stable) credit profile will be...
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Daily iron ore price update (crushed cat)

anvil Here are the iron ore charts for September 18, 2014: The dead cat bounce is falling to earth with a thud. Paper and physical are headed for a test of last week's low. It is a brave man that thinks they will hold. In news today, the Globe and Mail has a salutory piece on Chinese steel: Subsidies accounted for four-fifths of the profits reported by Chinese steel companies in the first half of this year, a dramatic increase in reliance on state support that illustrates starkly the industrial weakness that is an increasing drag on the economy. The headwinds faced by China’s massive...
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The Arrium lesson

images Stephen Bartholomeusz today argues that the Arrium capital raising went wrong because: ...Arrium announced the institutional component of the issue had raised $367 million -- only about 79 per cent of the institutional entitlements were taken up. The rest were cleared in a bookbuild at 48 cents, so the institutions that renounced their entitlements get nothing. The placement raised the $98 million sought, taking the proceeds so far to $465 million. Unsurprisingly in the circumstances, the Arrium share price crashed, falling to 40 cents. If it stays there the retail component -- about $290 million...
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Can the Australian dollar save iron ore miners?

images With some currency relief finally apparent for Australian tradables, Citi offers a timely take on how that might affect the miners: The A$ leverage is surprisingly similar for BHP and RIO, which comes as somewhat  of a surprise given that RIO has historically been more levered to the A$ than BHP. This is due to the impact of the Alcan acquisition reducing the A$ exposure of the  overall group and the still-high margins in iron ore (bigger exposure for RIO) being less sensitive to a lower A$ than the tighter margin coal businesses (larger  exposure in BHP). Given we are bearish iron ore...
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Arrium rupture punishes miners

vghmt It's not going well for the iron ore miners today. The rupturing of Arrium, Chinese house prices sliding fast and Chinese markets selling again with rebar futures down 19 points and Dalian iron ore futures down 4 points.  The falling dollar can't put a dent in it. Here are the juniors with everyone at 2014 (and much longer) lows: The majors are down hard too with BHP and RIO off 1% and FMG down 2.5% having lost the $4 handle again: All things considered it's probably quite a good performance and thus the idiocy spread has sooooooo far still to close:   In the immortal...
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You can’t keep a good iron ore man down

grt Despite the clear and present warning presented by Arrium today, the froth just won't leave the iron ore market. From Fairfax: Iron ore's slump to a five-year low isn't expected to prevent the world's two biggest miners, BHP Billiton and Rio Tinto, returning cash to investors, a JPMorgan Chase fund manager said. "You have to remember the very large operating margins which can still be achieved within iron ore," James Sutton, a portfolio manager at JPMorgan's $US1.6 billion ($1.78 billion) Natural Resources Fund in London, said. There's "a lot of scope for shareholder returns," as Rio and BHP...
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Take’n it in the Arrium

gfhyth64 Freshly returned from its capital raising: It's only the beginning and I've already gone and lost my...
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Daily iron ore price update (Aurongzon)

anvil Here are the iron ore ore charts for September 17, 2014: Paper is stalled and physical bleeding. CISA major steel mills output data for early September rebounded from the August crash. That's a good news bad news story. Demand worries can ease a little but steel pricing pressure will resume. Texture from Reuters: A surge in Chinese spot steel prices over the weekend helped fuel iron ore's surge on Monday. But prices have since retreated, with billet in China's key Tangshan area dropping 20 yuan a tonne on Tuesday, "fast removing the fragile industry confidence that had been building...
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Thermal coal damage looks real

Capture From ANZ: A general restriction which applies to all coal limits ash content to 40% and sulphur to 3%, with more rigorous conditions according to energy content and coals which travel beyond 600km from either port or mine. Lignite consumed within the 600km threshold will need to have ash below 30% and sulphur below 1.5%. The document also spells out limits on other chemical content such as mercury, arsenic, and chlorine. Coal which travels beyond 600km across the mainland will need to meet more stringentconditions – ash content can be no greater than 20% and sulphur no more than 1%. On...
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More on Fortescue channel stuffing

dfgse From the AFR: J Capital’s query lies with Fortescue’s inventory. It noted that Fortescue’s iron ore holdings at port more than quadrupled to 9.7 million tonnes as of June, up from from 2.1 million tonnes in June 2013. It says Fortescue’s port stockyard can only physically hold 3 million tonnes and that Fortescue has stated it has 3 million tonnes at that port. J Capital argues the rest, through its calculations and ground research, is being held in China. “We recently visited Caofeidian Port, the largest iron port in China, and found 3 million tonnes of FMG iron ore held in the bonded...
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Miners struggle to gain as iron ore futures roll

ik578i It's three times in a row for miners today, again out of the blocks early with strong price surges and selling hard (so far) during the day. The cause today is obvious enough with Chinese markets rolling over again. Rebar futures are down 6 points and Dalian 2 points. Here are the relative performance charts for juniors: And majors:   And still widening idiocy spread: The recent falls were abortive and the rally appears the...
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More on China’s thermal coal thump (updated)

China-coal-imports-17-September-2014-650x688 Lot's of mixed messages around the impact on Australian coal from the China ban. Reuters sees it as bad: Mac Bank is circumspect: Thermal coal has recently been selling off on anticipation of a Chinese ban  on high ash, high sulphur coal imports. Those fears were only partly allayed  on Monday when China’s NDRC published official regulation on coal quality  controls, effective 2015. The key points are: 1) For coal moved less than  600km (which is almost all imported coal), the strictest quality requirement is a  maximum of 30% ash and 1.5% sulphur, versus a draft proposal of 15% ash...
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Daily iron ore price update (Q4 wipeout)

anvil Here are the iron ore charts for September 16, 2014: Paper markets are stalled. Rebar futures fell. Physical too although rebar average bounced again despite more steel price cuts in Hebei. News today is dominated by the growing carnage in the iron ore mining sector. It’s been a disappointing couple of sessions on the ASX. For two days now equity has flown out of the blocks in early trade only to be sold off all day. One wonders if the “lighten up while you can” trade isn’t blooming. Starting at the top, Reuters is questioning the major's capital return plans: Sagging iron ore...
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China thermal coal ban to hit Oz?

images Yesterday China introduced new environmental standards on coal. From the AFR: Wood Mackenzie’s China consulting manager Rohan Kendall said none of the Australian thermal coal currently being exported to China would meet the new restrictions in China’s major cities. However, he said “it won’t be difficult for producers to meet the cut-off”. They will just have to wash the coal, which could increase the cost of production. Industry sources said the government moves were aimed at propping up the domestic coalminers, as well as assisting the power generators. In China, “both the...
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Valemax to dock in China

imgres From SCMP: Beijing's ban on Vale's giant ore carriers has been practically lifted after China Cosco Holdings' landmark deal with the Brazilian miner last Friday over a 25-year freight contract that involves 14 of the massive ships known as Valemax vessels, a person familiar with the matter said. "The current regulation actually already legitimises these vessels to berth at Chinese ports. If you look at how the ban was initiated in the first place, it will be unlikely for the government to make an official announcement with much fanfare that says the ban is loosened," said an executive at a...
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Our Nev cashes in

dfgse Must be stressful running the marginal cost producer in iron ore markets: Fortescue Metals Group chief executive Nev Power has been granted an 11.1 per cent pay rise, as the iron ore miner moves to reward the man who has overseen its near tripling in export volumes. In a move that could inflame relations with unions that are fighting for pay rises for tugboat workers at Port Hedland, Fortescue said a review of its executive structures had determined that the company was no longer paying competitive wages to its executives. Fortescue resolved to increase remuneration for executives by an...
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Iron ore recovery rolls on

idiot Chinese markets are in recovery mode again today with Dalian and rebar futures up 4 and 8 points each. Not tearaway but still up. Locally, miners are struggling to add to gains given the size of yesterdays bounce. In junior land, it's more of the same really, with ARI carnage the theme of the day: For majors, FMG is up 2.5% and trying to hold $4:   And the idiocy spreads are getting wider once...
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Rio Tinto a takeover target?

url Now I've seen it all: Rio Tinto is the latest resources company to be the subject of takeover speculation involving Switzerland’s Glencore. ...“The biggest issue now facing the mining industry is not so much operational as strategic. And we believe that some of the most important strategic challenges are those currently faced by Rio Tinto.” ...“If the price recovers (as we expect) it will, of course, strengthen Rio Tinto’s position,” Mr Gait says. “If it continues to decline then it will be painfully clear that their strategy of volume over price has failed. In which case a...
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Daily iron ore price update (good ‘ol days)

men-s-flying-anvil-t-shirt_design Here are the iron ore charts for September 15, 2014: Do not adjust your television set.  Markets went boom on the worst Chinese data since the GFC. It doesn't take Einstein to figure out why, from CNBC: While the Chinese government has indicated a greater tolerance for a slower growth, economists expect Beijing to turn on the stimulus taps to prop up the economy following a sharp deceleration in activity growth in August. "I think the data was sufficiently weak to lead to significant steps. When? Such responses tend to be quite fast in Beijing. I would expect to see steps, or...
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The amazing mispricing of iron ore equities

stock-photo-tens-of-arrows-that-have-missing-the-target-187173071 Regular readers will know that I'm more than a little amused by the current pricing of iron ore equities. To my mind it is screamingly obvious that the juniors are doomed and the majors are stuffed. The major reason is this chart which is, if anything, now too conservative: The chart takes reasonable account of shut downs in Chinese mines. It is this that has led me to name this the "idiocy trade". Yet the trade is attracting new fans by the day. Motley Fool is the latest to slap a buy on Rio Tinto: The share price of Australia’s largest iron ore miner, Rio Tinto Limited (ASX: RIO)...
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Will iron ore rise on a Q4 restock?

dfgwr BofAML think so: Demand & Pricing: near-term strong Q4 restock upside We believe that near term, a Q4 seasonal restock should still support prices for  the rest of this year. Despite a gloomy longer-term price outlook, we still see  several reasons why mills may pick up seaborne inventory in the fourth quarter: 1) Inventories of 25 days are now closer to trough levels, and we believe  mill/trader destocking activity will naturally fade at lower prices here. 2) Chinese domestic production usually dips in Jan/Feb during CNY and the  Chinese winter, leading to restocking of imported...
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