Iron ore price

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Iron ore futures rain on ASX parade again

imgres The ASX tried to take off again this morning and got a boost out of the 11.45 China PMI:   It's the same story with rebar futures in China which jumped half a percent on the release. The iron ore miners followed too. Here is FMG: The problem is, Dalian iron ore futures aren't playing. They opened down and have dropped further. Quite rightly. The PMI is encouraging for Chinese manufacturing but it doesn't say much about property and right now that's what matters. Actually, the more informative PMI for property is the official non-manufacturing PMI, which covers...
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Daily iron ore price update (Q3 destock) (members)

anvil Here are the iron ore charts for July 24, 2014: Paper markets are not quite back in free fall but they're sure not strong. Rebar futures were also down a little. Physical is weak too with the BDI cape up slightly and spot down consistently. I don't have a rebar average price today but I'd put the house on it falling too. Chinese mills are destocking raw materials again. It happens most years at this time and they have plenty to run down given the recent climb in inventories. The weak housing market persists and they may well push it. Reuters has texture: "I think some steelmakers might...
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Iron ore futures rain on ASX parade

imgres In case you're wondering why the air is coming out of the ASX rally and the iron ore juniors this afternoon, the dollar is up and threatening and Dalian iron ore futures are down 0.6% points in...
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Rio plots monster pit

images From The West: Rio Tinto is working on plans to build the biggest single pit iron ore mine in the Pilbara, filing environmental applications for a 70 million tonne-a-year monster at its Yandicoogina operation. ...The documents suggest the Pocket and Billiard South pit would be about 7.5km long and nearly a kilometre wide. Rio told the Environmental Protection Authority it wanted to begin production at the new pit in 2017, at an initial rate of 28mtpa. That would take total production at Yandicoogina to 70mtpa, with expansion of the pit likely as other areas of the mining hub wind...
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BHP dirt monster feasts

afw Woho! BHP is chucking out dirt like a transformer on steriods. From its Q2 production report: Strong operating performance delivered a 9% increase in Group production with annual records achieved across 12 operations and four commodities. Western Australia Iron Ore achieved a fourteenth consecutive annual production record as volumes increased to 225 Mt (100% basis), significantly exceeding initial full-year guidance. We now expect production of 245 Mt (100% basis) from the Pilbara in the 2015 financial year. Metallurgical coal production of 45 Mt exceeded full-year guidance as...
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World steel growth solid

Production_6 From the World Steel Association today: World crude steel production for the 65 countries reporting to the World Steel Association (worldsteel) was 137 million tonnes (Mt) in June 2014, an increase of 3.1% compared to June 2013. World crude steel production in the first six months of 2014 was 821.3 Mt, an increase of 2.5% compared to the same period of 2013. The EU 28 showed an increase of 3.8% while Asia and North America reported growth of 2.9% and 1.7% respectively in the first half of 2014. South America and C.I.S. produced -1.0% and -2.6% less each. China’s crude steel production for June...
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Daily iron ore price update (head fake) (members)

anvil Here are the iron ore charts for July 22, 2014:   A bad day at the office. Paper markets delivered a head fake as spot sold. The slavish devotion of iron ore equities to daily Dalian futures pricing is not foolproof. Rebar futures were soft and BDI cape flat. Worryingly, rebar average is falling steadily once more. The restock is done, whatever Dalian did for one day. Reuters has texture: "You can see from the relatively high stockpiles of iron ore at the ports that things haven't changed very much and demand isactually pretty weak from traders, and probably getting...
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China leading index bounces

images17 I can take or leave these leading indexes but the Conference Board version for China just posted a strong result, up 1.3% in June, to 294.0. Forexlive reports that: Follows a 0.7% increase in May and a 1.1% increase in April Five of the six components contributed positively to the index in June Andrew Polk, resident economist at The Conference Board China Center in Beijing: “June’s pickup in the leading economic index for China is unlikely to be fully felt until the final quarter of the year, even though slight monetary loosening and better export performance could underpin more...
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Mirabile dictu: MS says short Fortescue

anvil Now they're getting it. From Morgan Stanley today: We believe the share price will fall in absolute terms over the next 15 days. This is because the stock has traded up recently, making short term valuation much less compelling. Data points from the Chinese steel industry suggest the recent restocking cycle may be concluding. Total steel inventory of traders and mills combined has dropped below 12 days of production, down from the peak of 17 days in February, which suggests demand has eased as we enter the slow season. Also 37 days of iron ore inventory at ports is the normal operating level...
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Daily iron ore price update (property problem) (members)

dgrwa Here are the iron ore charts for July 21st, 2014: Paper markets have broken down. Rebar futures especially have choked. Physical is not much better. Spot is falling, port stocks rose slightly on the week and are rock solid, and the BDI cape fell another 3%+ to only 20 points above its post-GFC low. We are signalling a renewed destocking here on two factors. The property slowdown is not under control and we've entered the Q3 seasonal construction slowdown. Texture from Reuters: Stocks of five major steel products held by Chinese traders fell to 13.13 million tonnes on Friday,...
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Iron ore zombie shuffles towards writedowns

Capture Arrium has reported production for the second quarter and, hey, hey, it's more dirt, 3.32 million tones of it for a total over the year of 12.5mt. It expects to be at 13mt output with six months. Realised prices tumbled to $85 per tonne. Well, good for it. Here's the UBS grade adjusted break even chart:     Not such good news, then. For interest's sake, here is the comparative chart of Bluescope and Arrium over time: Lousy investments, both, but the praise that was heaped upon Arrium (formerly Onesteel)  for a few years as a vertically integrated iron ore and...
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Is mining’s lost decade behind or ahead?

dsfqa Citi offers a take on the coming cost-out super cycle for resources firms: A lost decade for the mining industry — We have completed a detailed analysis  on the operational efficiencies for mining industry, which points to a strong  correlation between operational efficiency and share price performance. Our analysis highlights the wrongs of the past, but also highlights significant future  opportunities in the sector. The depressive facts — Lower operational efficiencies have cost the large mining  companies c$35bn since 2005. The industry has seen a >30% rise in unit costs, a...
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Iron ore futures smacked again

images Forexlive is reporting another provocative editorial from the closely followed China Securities Journal: Mini-stimulus via monetary and fiscal policies cannot provide long term power for economic growth and their risks cannot be underestimated Says PBOC’s targeted policy measures cannot guarantee money is flowing to where it’s most needed (noted that in Europe, estimates that only 5% of the ECB’s LTRO during 2011 and 2012 was used to fund the real economy) Warned that M2 at the end of June rose much higher than the government’s target, and that government and corporate...
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Daily iron ore price update (all red) (members)

anvil Here are the iron ore charts for July 18, 2014: Paper markets had a bad day with rebar futures smashed as well. Physical eased although the BDI cape fell another 1% and is now at its lowest point since the 2012 crash. I repeat, there is no restock coming and the opposite is a reasonable prospect. No update yet on weekly port stocks. It's a watching brief. Chinese housing is not yet out of the woods with price falls on new homes accelerating in June. Remember that it is new homes that matter in this cycle. China sub-prime borrowers are not households. They are the developers that have...
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Iron ore futures hit as Chinese houses deflate

images Chinese markets are open and Dalian iron ore futures are taking a shellacking, down 1.5% to 700 yuan. Rebar futures are likewise off 1.2%. Local miners are following. Chinese new home prices are out and fell for the second month: All June new home prices -o.5% month on month, May was -0.2% All June new home prices 4.2% year on year, May was 5.6% New home prices fell month on month in 55 cities versus 35 in May June Beijing new home prices 6.4% year on year, May was 7.7% Shanghai new home prices 7% year on year, May was 9.6 pct In short, new home price falls are still...
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Daily iron ore price update (top) (members)

cvas Here are the iron ore charts for July 17, 2014: Looks increasingly like a I did call the top. Paper markets are a big yawn. Physical markets are marginally better with rebar average still rising but spot is down and the BDI cape fell another 3% signalling absolutely no interest in a material restock and probably the reverse, which didn't stop Vale from making a gig of itself: Brazil’s Vale (NYSE:VALE) chief executive officer Murilo Ferreira said Thursday prices for the steel-making ingredient would climb up back to historical levels in the second half of the year lifted by a flurry...
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Another zombie iron ore miner boosts production

Capture I wasn't going to rain on the iron ore party today but with the juniors flying it's irresistible. From the SMH blog: Mt Gibson Iron is one of the best performers today, with its shares up 4.7 per cent to 72c after reporting record full-year ore sales and revenue. In the June quarter iron ore sales came to 2.6 million wet metric tonnes (Mwmt), an increase on the 2.3 Mwmt in the previous corresponding period. This brought full-year iron ore sales to a record 9.7 Mwmt, an 11 per cent increase on the previous record set in 2012-13. Full-year free-on-board iron ore sales revenue also hit a...
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Daily iron ore price update (calling the top)

Capture Here are the iron ore charts for July 16, 2014: Today I'm wondering if I called the top yesterday. Market action is mediocre. Rebar average kept its weak rise going so that's encouraging. But paper markets have clearly priced China's GDP rebound already. The BDI cape collapsed 6.5% to its lowest point in 2014. I don't take it literally but as a signal for the stocking cycle it's saying de-stock baby. Texture from Reuters: Firmer steel prices have helped spot iron ore prices move closer to $100 a tonne this week, a level it breached in mid-May, as traders raised their bets on a...
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FMG shares pop on secret volumes

fa From the AFR: Shares in Fortescue Metals Group have surged shortly before midday, after the iron ore miner published aggressive production guidance for the 2015 financial year. Fortescue has told investors it could produce as much as 160 million tonnes in the new financial year, suggesting the capacity of its export system is not limited to 155 million tonnes as previously thought. Hmmm...a 3% rise in output versus the deluge and falling price ahead. Not that is matters overly but if another 5 million tonnes knocks a tiny fraction off the spot price then margins and profits will actually...
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Rio prepares second iron ore tidal wave

pilbara-200x200 Rio Tinto has released its Q2 production report. Here is the only part that matters: Record first half iron ore shipments, production and rail volumes. Shipments from the Pilbara exceeded production as stocks built ahead of the delivery of the expanded infrastructure were drawn down, while existing mines continue to be expanded to utilise increased rail and port capacity. In May, Rio Tinto announced that its Pilbara iron ore system of mines, rail and ports reached a run rate of 290 million tonnes a year (Mt/a), two months ahead of schedule. The rail duplication and trackwork required for...
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Daily iron ore price update (mildly bullish) (members)

bfsf Here are the iron ore charts for July 15, 2014: Yesterday I said of predictions of a dramatic recovery in iron ore price: That’s a contradiction in terms. If there is a dramatic recovery in prices then whatever Chinese ore production that has idled will resume. There is nothing to suggest Chinese growth going gangbusters either. Infrastructure is being boosted to offset weakening property demand. Unless I see a sharp turn in property starts and credit in the next few days of data then the base case remains that Chinese growth will fade again into Q4.  Well, one of the conditions to...
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Atlas opens new doomed mine

Capture From the ABC: Mines Minister Bill Marmion is hoping the opening of more mines in WA will help boost confidence in the industry. Atlas Iron's newest iron ore mine, south-east of Port Hedland, will officially open today. Mount Webber is the company's fifth and lowest cost operation to be opened in the region since 2008. Mr Marmion says the operation is expected to deliver about six million tonnes of ore a year and create 200 jobs once fully operational. "The feeling, in not only iron ore, but in general, is upwards at the moment," he said. "I think last year it was a bit flat but I have been...
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Why iron ore miner shares are still struggling

ubs Rebar and Dalian futures are flattish today in China but iron ore miners are still enjoying a little bounce on overnight action. The equity price rebound so far has been pretty weak and a quick take from UBS shows why. At current price levels the hit to earnings for miners is still big:   All else remaining equal, our BHP & RIO earnings estimates for CY 15  would be -2% and -6% respectively under a spot scenario. Nevertheless, RIO would  trade on cheaper spot multiples at 10.3x CY 15E PE vs BHP at 12.6x CY 15E. Iron ore:  The spot iron ore price is 5% below our CY 15 forecast, and implies...
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Daily iron ore price update (dramatic recovery!) (members)

zfda Here are the iron ore charts for July 14, 2014: It's not easy to see given how muted this recovery is, but all indexes hit new highs for the move yesterday. Same with rebar futures.  That has to be bullish for the short term. But I still can't get excited. Rebar average has hardly budged. The BDI cape fell another 3%plus  and there is no evidence of a restock. We appear to have enough underlying demand to have stabilised prices and paper markets have drawn in a few traders but there's still little to suggest a substantial shift. Reuters has more: It was the fifth day of gains...
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Thinking iron ore miners? Think dot bomb stocks

sfas My old stable mate, Greg McKenna continues to get excited by a blip on his iron ore chart. From BI today: We’ve been watching it for a while now but iron ore finally broke through the $97 tonne level on Friday night for a very strong weekly close. It’s the fourth week in a row that iron ore has finished higher after a strong bounce from the $86.67 low a month back. Closing Friday night at $97.17, 62% Fe futures for September delivery are now $8.5 tonne higher (9.59%) than the recent low. Earlier this month we highlighted that both Fortescue Metals CFO Stephen Pearce and analysts at...
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