Iron ore price

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UBS says market missing BHP iron ore value

imgres From Dow: The market’s fixation of BHP Billiton Ltd.’s (BHP.AU) spinoff and the absence of a buyback at its results means it appears to have missed the value being created in its iron-ore unit, says UBS analyst Glyn Lawcock, who lifts his NPV estimate on the stock 10% to A$46.09. BHP’s Western Australia iron-ore division is now expected to expand to 290 million tons from 225 million tons for under US$50/ton of capex. It had previous been expected to lift capacity to 270 million for around US$100/ton, Lawcock says. “The reduction in capital intensity alone is a saving of around US$3...
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Iron ore paper resumes tumble, miners rise

majors The news out of China this morning was more deceleration and but that's not affected most miners today with only FMG down at this stage. Here is the up-to-date relative performance chart for juniors: And the majors: Despite equity resilience, the idiocy spread appears to have bottomed. Remember that it's an indexed 7-day moving average so it is still catching up to last week's falls: As mentioned, FMG is most sane today, down nearly 2% and following Dalian and rebar futures in China which are also off 4 and 10 points...
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Daily iron ore price update (dead cat)

fthete Find below the iron ore price charts for August 29, 2014:   Paper markets caught a break and stopped falling. The 12 month swap even managed a small rise. However, that's closed the paltry contango with spot, which also firmed. There are definitely punters on a bottom emerging, as seen in the big upwards reversal of miner equity prices on Friday. I don't buy it yet. We've not moved into contango, which the market usually does before a turn in the cycle. As well, port inventories rose again last week by another 425k tonnes. I've warned many times not to take port...
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Iron ore miners defy price falls

maj Iron ore miners opened with a big drop this morning, with FMG especially down, threatening to break $4 and its 2014 low but since it's been all rally as Dalian and rebar futures opened marginally lower in China. Majors are still down a little but FMG is flat: And the idiocy spread has closed a touch: But juniors haven't budged: I have no idea why the very obvious risks aren't being priced other than the general overvaluation. Having said that, overvaluing zero is still...
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UBS: Atlas may “regret” payout

imgres Atlas Iron reported yesterday and UBS has this to say today: Despite reporting underlying EPS of just 0.9cps, AGO has announced an unfranked 2cps final dividend (UBSe No Div). We are surprised by the dividend given AGO now has net debt as of 30 Jun 14, and based on UBS forecasts for iron ore to average US$103/dmt cfr over FY 15, we still see AGO's net debt increasing. AGO is guiding to C1 costs of A$47-50/wmt FOB for FY 15 (A$51/wmt FOB FY 14), with lower SG&A and D&A charges. As a result, FY 15/16E earnings lift materially, but off a low base. Our forecasts are based on a...
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The Chinese will save iron ore!

imgres The ABC does iron ore this morning and there are some fun quotes: Iron ore consultant Philip Kirchlechner said it was being driven by too much supply. "The problem is there's been a huge influx of supply into the market over the last twelve months and that's really the key driver behind this slump in iron ore prices," he said. ...Macquarie Private Wealth's Bevan Sturgess-Smith said..."Whenever you get news out of China like that, it does tend to drive markets down a little bit, so people get a little bit nervous," he said. An oversupply of housing and government moves to discourage investment...
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Daily iron ore price update (miners hammered)

anvil Here are the iron ore charts for August 28, 2014: Sheesh, where to begin! Paper markets got pulverised yesterday. The Singapore swaps rebounded before day's end but Dalian didn't. Rebar futures are roughly 100 yuan south of physical and still falling. The benchmark iron ore price fell another $1 to $87.30 within a whisker of the post-2009 low at $86.70 and it's going to break. A small contango with long swaps has reformed but given the broader weakness in paper remains unconvincing as a turning signal. The following chart from Axoim Capital also suggests it's not over. Observe...
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Fortescue hit as iron ore futures tumble (updated)

dfwe Today's midday iron ore update sees Fortescue Metals showing some material weakness down 3.5% to $4.15 and not too far above its 2014 low at $3.96. The other majors are also down firmly: The idiocy spread remains very wide: The juniors are selling hard as well with AGO down 4% to .59 and fast approaching its 2014 low of .54: More than a hint of capitulation now with Dalian iron ore futures down 14 points to 628 in China and rebar futures down sharply as...
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Daily iron ore price update (uh oh)

anvil Here are the iron ore charts for August 27, 2014:       Paper market weakness returned with a vengeance with new lows on everything. Physical is worse. The iron ore contango is gone and steel prices are now in free fall. Fresh CISA fast data has large steel mills increasing production in the mid August period 0.5% to reach 1.83 million tonnes. It seems to be largely going towards increased inventories with CISA also reporting that mill stockpiles were at 15.25 million tonnes as of Aug. 20, up from 14.57 million tonnes ten days earlier. That'll keep weighing on steel prices, thanks very...
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Chinese iron ore production is booming

dgfqeaws The one question that nobody in the iron ore sector (or Australia more generally for that matter) dare ask is what if Chinese iron ore production does not close as Australian miners ramp up output. The reason nobody asks it is that the outcome will be calamitous. But it's a very real question to pose, especially since the evidence too date supports that very outcome. We should all recall that throughout the last few years every miner and his dog has argued that Chinese production will close down on mass from $120 downwards, giving birth the so-called "$120 price floor" notion. Well, we're sub-$90...
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Iron ore “idiocy spread” goes mainstream

3 There's no acknowledgement as usual but it's clear from Roger Montogmery's latest post that he is familiar with the "idiocy spread": We are following, with great interest, the discussion currently unfolding in the market about iron ore and the big miners. On the one hand, we have the spriukers calling for a ‘rotation’ out of banks and into the big miners. The logic is no more sophisticated than saying: “You should sell the banks and buy the miners because the banks have gone up a lot and the miners have gone down a lot, so it’s now time for the miners to go up a lot”. On the other hand,...
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Hope persists for miners as iron ore futures fall

dfgwr You can't keep a good dead company down! Iron ore juniors and majors are mostly up today, even as Dalian iron ore futures fall 3 points to their Monday lows and rebar futures stall in China: The idiocy spread hasn't deteriorated much yet (remember these are one week moving averages) but remains at a record wide:   Clearly markets are still reckoning on a rebound soon. Some sort of Q4 restock will probably still come but at the current rate of decline in Chinese housing data it ain't going to be much chop. I remain of the view that equities are not sufficiently discounting this...
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Daily iron ore price update (2014 low) (members)

anvil Here are the iron ore price charts for August 26, 2014:   Paper markets rallied moderately, including rebar futures. Spot has formed a small contango with the 12 month swap, one signal that a reversal maybe at hand. However, it's tiny so not overly convincing. Prices of port stocks are rumoured to still be falling. The BDI cape is now reversing sharply. Steel First is reporting that both BHP and Rio have closed port berths for maintenance, which may be normal or playing silly-buggers. Reuters has texture: But China's raw iron ore output has continued to increase, with...
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Iron ore miners mixed as futures bouce

2 Dalian six month iron ore futures and rebar futures are off the canvas today in China up 3 and 5 points respectively. That's helped a few junior miners bounce for no apparent reason given the news from Cliffs that formerly good assets are going at fire sale prices. Perhaps markets reckon on some junior mergers, so that they can all go bankrupt together:   Major miners are behaving a little more sanely, down despite the dead cat in China: And the idiocy spread has not at least gotten any...
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Iron ore assets fire sales begins

imgres Don't know if anyone is buying but roughly 12 million tonnes per annum of formerly profitable Australian iron ore mines is on the chopping block, the WSJ reports in an interview with Cliffs new CEO Lourenco Goncalves: Iron ore is the main ingredient in the making of steel, and Cliffs's U.S. mines have benefited from the resurgence of the Detroit auto industry, drill-pipe demand for natural gas wells, and their geographical advantage over iron ore superpowers Brazil and Australia. Other Cliffs assets, such as coal mines in the U.S., iron ore assets in Australia and Canada and a suspended...
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Daily iron ore price update (lurching price deck) (members)

anvil Here are the iron ore charts for August 25, 2014: Ugly. Paper markets all hit new record lows, including rebar futures. Physical is now falling in simpatico. Texture from Reuters: "When the price drops this fast, Chinese mills tend to wait and see and buying activity could slow down. Supply is still huge and we see various offers from miners, big mills and traders," said an iron ore trader in Shanghai. Big Chinese steel mills have been reselling excess cargoes from their long-term contracts with suppliers amid a global surplus The poor sentiment surrounding the Chinese economy...
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Introducing the iron ore equities “idiocy spread” (members)

images 'Tis a slow news days today and perhaps I've got too much time on my hands. Then again, I may have just had an epiphany. I am referring to my new iron ore indicator, the "idiot spread". Rebar futures have opened the better part of 1% down in China and Dalian iron ore futures are down another half percent as well. Local iron ore miners are falling sharply and juniors remain quite sickly, though not as terminal as they should: The majors, however, remains far above where they were the last time the iron ore spot price was at these levels, and hugely above the 2012 crash: Which brings...
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Daily iron ore price update (smash, UPDATED) (members)

anvil Here are the iron ore charts for Friday August 22:     Paper markets held up, including rebar futures, but physical got smashed. Spot is on track to retest its 2014 low at $89 and looks likely to break it, frankly. Benchmark port stocks are rumoured to be selling in the mid $80s per tonne. The BDI cape fell and in news that will not help markets today, port stocks rose on the week 300k tonnes. Hard to see anything other than more falls this week. These kinds of bleeding moves tend to culminate in a capitulation phase with price-gapping, and steel demand is clearly getting...
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Iron ore miners’ dirty PR war swamps media

dirty-windscreen This morning The Australian is reporting (or thinks it is) that: ... in a declaration largely lost amid BHP’s plans for a $US14bn spin-out of non-core assets, the world’s biggest miner says it is looking to expand its Pilbara iron ore mines and ports to annual capacity of 290 million tonnes a year. This is up from a previous target to grow to 270 million tonnes and at a forecast capital cost that is dramatically lower than guidance given to analysts a year ago. “We would say it is quite unlikely that we would see prices north of $US100 a tonne, so our forecasts are obviously based on...
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Iron ore miners caned despite futures

dfgewq Bit of a reversal of recent trends going on today for iron ore equities with Chinese iron ore and rebar futures up, 2 and 10 points respectively,  but the locals getting smashed, with FMG leading the way. Here are latest relative performance charts. In recent times, juniors have arrested falls as the price hasn't breached new lows and bong-smokin' hopes of acquisitions persist despite busted business models: The majors have all been enjoying time in the sun as fundies buy the "volume to outpace price" drivel: Anything other than high-risk tactical plays remains a resounding "don't...
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Daily iron ore price update: arse gone (members)

anvil Here are the iron ore charts for August 21, 2014: The arse has fallen out of paper markets. The 12 month swap is in free fall. Dalian six month futures are in free fall. Rebar futures are in free fall. In some good news, we may all be able to trade Dalian soon: China's Dalian Commodity Exchange (DCE) will actively explore ways to realize internationalization of its iron ore futures, including implementation of iron ore futures bonded delivery and introduction of international investors, according to Li Zhengqiang, general manager of DCE. Li made the remarks at the 2014 China Coal...
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Key reversal in miners as iron ore futures fall

imgres It was all going so well! Some bloke recommended an FMG long and iron ore miners took off this morning, up 2% plus, ignoring the dire price action in the commodity. After all, it's only what they sell, it's not the actually the company! Alas, then came the China PMI and it all went horribly wrong! The seniors all turned south: As did the juniors: Of course, AGO doesn't fall these days because some dill is going to buy its broken business model, apparently (certainly the Chinese might but what's the rush?). The culprit was Chinese markets where the PMI shoved Dalian iron ore...
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Pilbara pop

images As usual, we must go offshore to find any decent Australian media and it's at the FT today that a great story is playing about the raging bust gripping Pilbara towns: In a dusty industrial estate next to the world’s biggest iron ore port in Western Australia’s remote Pilbara region, business has never been so bad. “The rents got so high in the town that when the boom ended, businesses began to die off everywhere,” says Jo Woodward, owner of Jems, a ramshackle building with an eviction notice stuck to its padlocked gate that was recently Port Hedland’s only legal...
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World steel production slows sharply

Production 07 Fresh from the World Steel Association for July: World crude steel production for the 65 countries reporting to the World Steel Association (worldsteel) was 137 million tonnes (Mt) in July 2014, an increase of 1.7% compared to July 2013. China’s crude steel production for July 2014 was 68.3 Mt, up by 1.5% compared to July 2013. Elsewhere in Asia, Japan produced 9.3 Mt of crude steel in July 2014, the same level of production as in July 2013. South Korea produced 5.9 Mt of crude steel in July 2014, up by 6.2% on July 2013. In the EU, Germany produced 3.4 Mt of crude steel in July 2014, an...
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Buy iron ore, says some bloke

imgres From CNBC: "It is time to tactically get long iron ore swaps and Fortescue Metals," Conor O'Malley of independent research firm View from the Peak said in a note. While a weakening real estate market in China, which accounts for around two-thirds of global iron ore purchases, coupled with a flood of ore supply suggests further gloom for the market, O'Malley said this shouldn't put investors off. "Accepting all of the above, it is still time to buy iron ore exposure as we move into the Chinese winter," he said. But View from the Peak's O'Malley is confident that the market's dynamics...
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