Iron ore price

Viewing posts in the Iron ore price category

WA’s delusional iron ore forecast sinks Budget

ScreenHunter_07 Nov. 22 08.59 By Leith van Onselen The comedy act that was the 2014-15 Western Australian State Budget, which delusionally forecast high iron ore prices as far as the eye can see, along with surging royalty revenue (see below table and chart), has finally been exposed, with the State Government's Mid-year Financial Projections Statement revealing a $1.6 billion downgrade in Budget revenues in 2014-15, and an unprecedented $5 billion downgrade over the forward estimates period (2014-15 to 2017-18). According to the Statement: Notwithstanding strong growth in exports (with Western Australia accounting...
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Government slashes official iron ore forecast

ScreenHunter_05 Mar. 12 11.39 By Leith van Onselen The Department of Industry, which replaced the now defunct Bureau of Resources and Energy Economics (BREE) as the official commodity forecaster, has heavily downgraded it iron ore price forecast next year to $US63 a tonne, from $US94 a tonne in September. Below are the key extracts from the quarterly report: A rapid increase in the supply of iron ore combined with moderating demand growth in China resulted in the price of iron ore falling 50 per cent in 2014. The price of iron ore (FOB Australia) has averaged US$90 in 2014 but as of mid-December is trading around US$70, the...
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Daily iron ore price update (steel glut)

ScreenHunter_07 Nov. 26 16.13 Here are the latest prices and charts pertaining to the iron ore complex, with small bounces recorded for spot (Qingdao), 12 month swap and futures, but ongoing falls for steel prices (Rebar), which hit a multi-year low: Note from the above that average steel prices (Rebar) have fallen to their lowest level in at least 5 1/2 years. The news comes as Beijing has been found to have routinely underestimated output from its sprawling steel sector, according to the SCMP: Beijing has vowed to cut overcapacity in its steel sector, the world's biggest, but huge discrepancies in the data...
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Daily iron ore price update (uptick)

iron ore cranes digging by Chris Becker An arrest in falls yesterday across the iron ore complex, saving rebar, as news that India will be adding to the seaborne supply glut in the near future. First the tables and charts: Texture on India from Mining Weekly: India’s steel ministry today said that state owned mining company National Mineral Development Corp will raise output to over 75 million tonnes per annum by the 2018-2019 financial year. The target for 2020-2021 is more than 100 million tonnes per year. That’s up from only 30 million in the current year. The production surge is required to push...
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Daily iron ore price update ($60 floor)

its-all-good1 by Chris Becker Sell offs do not go much smoother than this and has given ample opportunity for the longs and shorts to step off and on, as iron ore hovers just above the five year low:   With the MYEFO forecast target of $60 in sight (down from $95 per tonne from only a year ago that "no one saw coming") BHP has confirmed such a drastic price target calling $USD65 a tonne an "appropriate" target. With a breakeven in the $30 range, of course its appropriate! More from BS: The latest investment bank to lower its forecast is Morgan Stanley, which cut its 2015 prediction by 9...
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Daily iron ore price update (no restock)

How-to-Cut-Hair4 by Chris Becker The iron ore complex continues to fall, with Dalian futures off more than 2% with 12 month swaps following: The investment houses are catching up on their price forecasts with Morgan Stanley out with a new lower price, contending an average $79 per ton in 2015 and $75 a ton in 2016. Its all about supply of course with increasing idle capacity in China, text from Bloomberg: “Led by Australia in 2014, the relatively low-cost supply surge continues to dramatically alter the character of the industry’s supply side,” the Morgan Stanley analysts wrote. “Many of the...
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Daily iron ore price update (stable)

calm_sea by Chris Becker Iron ore prices remain under the $70 level in Qingdao, while 12 month swaps fell: Rebar average remains in freefall, not helped by the industrial production numbers: While Dalian futures are pointing to an uptick but not a restocking:   Iron ore is fast approaching a 50% retracement for the calendar year, alongside many other commodities, although thermal coal is "only" down nearly 30% With moves like that, its inevitable that the bulls and knife catchers are out with the folks at Vale hopeful for a bounce (Reuters): The case for a stabilisation in...
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UBS: only BHP and RIO to survive?

two-giant-pandas-play-wrestle-in-their-pen-chengdu-zoo-sichuan-province-china by Chris Becker An updated break even chart for iron ore producers from UBS is out today:   One must remember that the price quoted by Platts and Bloomberg is a landed price, on a dry basis for 62% Fe fines product, which is before any discount or premium is applied for product quality. UBS notes that in calculating their breakevens that: costs have come down for producers with some boasting record months for production and cost. Capesize freight rates have reduced from US$9/t to US$5.50/t and the AUDUSD has fallen from 86c to 82.5c while the lump premium has increased from...
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Daily iron ore price update (fugly data)

anvil6-200x2001 Here are the iron ore charts for December 12, 2014: Poor price action. Paper is stable but Qingdao is 50 cents from a new low and rebar average cant find a bottom. Worse, the news today is all about poor macro data. As expected, China's November data dump was weak. Fixed asset-investment growth continues to bleed: As does real estate investment growth, the destination for near enough to half of Chinese steel output: One bright spot was a rebound in credit growth, which has taken the year on year growth rate to only minus -7% now: Not enough to turn around iron ore by...
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Big iron ore miners enter free fall

2 The majors are in free fall. RIO is down 2% today and approaching the first of its major support lines $52.37. The next and final is the 2012 low of $49.24:   The GFC low is plausible target for the stock. What? Yep, as iron ore drops below $50 what the will be the reason to own RIO? BHP's chart has already broken down and its GFC low is closer. I also expect this will be met, at least:   FMG is also at a new post-GFC low of $2.42, on its way to sub $2 and retructuring:   There is nothing that can halt this so far as I can tell. It will all happen in the...
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Daily iron ore price update (weak again)

anvil6-200x2001 Here are the iron ore charts for December 11, 2014: Another weak day. Paper is firm but physical is not. Benchmark fell to $69.80. Leading us down now are steel prices with rebar average hitting new post-GFC lows every day. I've added the long term chart above for perspective. Texture from Reuters: "Some of the mills think that the room for prices to fall further from this point is probably small. We're getting inquiries for cargoes and demand has not shrunk," said an iron ore trader in Shanghai. ...Some traders remain cautious. "We have not bought any cargo this month so far. We're...
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Cuts at BCIron as Mac Bank says time to die

imgres From The Oz: BC Iron will cut staff at its Nullagine mine in Western Australia and head office as it reduces costs amid weak iron ore prices. The Pilbara miner said amid the challenging environment for iron ore, the company has been focused on reducing costs at the Nullagine mine, a joint venture with Fortescue Metals. BC Iron lowered its cash cost guidance for the remainder of full year 2015 to $47-51 per per wet metric tonne and $54 to $61 per wmt for all-in cash costs. The cost reductions would deliver savings of $2 to $3 per wet metric tonne, the company said. It's all so terribly...
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Big iron ore miners sag again

3 The major miners are taking it in the neck again today with RIO deep in the $55s and at 2014 lows, BHP was deep in the 28s at new lows as well until the bottom feeders pounced, FMG is repeating yesterday's tumble and bounce routine as well but is still below $2.50. Here are the indexes: The idiocy spreads are unchanged and still have miles to close: The juniors are much the same as yesterday, too, though ARI is exploring new depths at 18 cents: Dalian offering minor support up 3 to...
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Roubini sees iron ore under $60

sdfg From Bloomie: Iron ore may drop to less than $60 a metric ton next year as the largest mining companies press on with raising supply, deepening a glut just as demand growth in China falters, according to Roubini Global Economics LLC. The commodity will average $65 a ton in 2015, with weaker prices in the first half before a recovery as some higher-cost capacity is closed, Director of Commodities Helen Henton said in an interview. While producers won’t fare well in an environment of falling prices, it does make sense for low-cost suppliers to keep expanding in the expectation that...
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CLSA says buy BHP

imgres From The Australian: CLSA upgrades BHP Billiton (BHP) to Buy from Outperform, while lowering its target price to $35 from $38/share. CLSA analsyt David Radclyffe says each of BHP’s core commodities (iron ore, oil, and copper) is now trading below long run fundamentals and he expects a stabilisation to modest recovery across these core commodities in 2015. “Despite rebasing for lower oil prices, BHP remains a very robust business with a strong balance sheet and further opportunity for further cost out,” he says. “We expect BHP to fund its progressive dividend which has been a key point of...
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Daily iron ore price update (more to come)

anvil6-200x2001 Here are the iron ore charts for December 10, 2014:    More poor price action. Most markets held up but rebar average is now in free air at record lows. So long as it keeps falling the risk of another price attack on iron ore is high. Texture from Reuters quoting Citi: "However, more pain is expected in January, February, and beyond. Underlying Chinese steel demand is expected to once again weaken and the annual steel restock should be smaller than normal. ...Domestic iron ore mines have yet to fully accept lower prices though, with production likely to fall further and accumulated ore...
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Fortescue to sell assets?

noah-russell-crowe-pre-618x400-200x200 From Reuters: While the company and investors say it is not under immediate pressure, facing no bond repayments until 2017, Fortescue Chief Financial Officer Stephen Pearce told a UBS conference last week the company would be open to selling stakes in its mines. "Fortescue is not engaged in any processes with banks around the sale of assets," a spokeswoman said in an email. Fortescue is now producing two-and-a-half times as much iron ore as it was in 2012 and has slashed its all-in production costs to the equivalent of $60 a tonne, compared with an iron ore price of $69.70. "They aren't under...
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Fortescue plunges as other iron ore miners rally

2 The big miners are enjoying a little relief today after yesterday's mauling, except for FMG, which is down anther 4% to a new low of $2.45. Here is the index chart: FMG's debt spreads continue to blow out and it is only a nudge away from closing the idiocy spread. The others are slowly joining it, with RIO roughly 30% overpriced: In junior land, the carcasses are piled high with BCI a bloody pancake: Dalian has opened 1 point...
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Commodity de-financialisation accelerates

dsgfgj From Citi:  Retail and institutional commodity assets under management estimates for October suggest a 2% drop m/m and 20% decline y/y to c$307Bn (not inclusive of structured/OTC products) and we expect final November data will send this figure below c$300Bn for the first time since 4Q’09. Such a level would be at least c$255Bn shy of the recent commodity AUM peak in April 2011 during the height of the Libyan civil war and MENA spring. The total gross market value of OTC commodity derivatives have plunged nearly c$390Bn since the 2007 pre-Financial Crisis high to c$270Bn at the end of...
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Daily iron ore price update (bad)

anvil6-200x2001 Here are the iron ore charts for December 9, 2014: That is unhappy data. Paper is burning again. Physical clearly cannot escape the pull of $70 to the upside. Benchmark is at $69.40. Moreover, rebar average just violated record lows. The CISA fast data for late November shows steel output has rebounded following APEC but is hardly tearing it up into the seasonal slowing of winter. Platts steel index improved a bit: Still stuffed. And so is iron ore. Reuters has texture: The most-traded May contract on the Dalian CommodityExchange dropped to as low as 471 yuan ($76) a tonne and was...
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58% iron ore future launches

computer-shopper-crystal-ball A new iron ore future is out: CME Group, the world's leading and most diverse derivatives marketplace, today announced the first Iron Ore 58% Fe, Low Alumina, CFR China (TSI) Futures contracts were cleared on 8 December 2014, through CME ClearPort.  The first trade was executed between Caravel Metallurgical Ltd and a large international trading house, and brokered by GFI Group.  A total of 20 lots traded in the January 2015 contract on 8 December. "We are excited to see healthy support and interest in our new Iron Ore 58% Fe, Low Alumina, CFR China (TSI) Futures contract on day one," said Yvonne...
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Iron ore miners burn

2 The stink of burning flesh is palpable today as iron ore miners, trapped in their rusting machines, burn. All three majors have hit 2014 lows with FMG down 4.5%, RIO down 2% and under $56 and BHP sprayed with its own ignited crude down 3.3% to $29. Here are the indexes: FMG is on the verge of crossing iron ore as it should have long ago. The idiocy spreads are all screaming shut with RIO so mispriced I could vomit: But if it's seared flesh for the majors, it's an a offal conflagration for the juniors, eye balls bursting where they stand as every one hits new lows for...
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JPM cuts iron ore, downgrades FMG

url In the annals of "too late the hero", the biography of sell side research, this one would rank quite highly were the tome already not so unwieldy huge. From The Oz blog: Our Global Team has lowered iron ore price forecasts by 24%/23%/16% in CY15/16/17 to US$67/65/69/t.  Impact on BHP. Our BHP NPAT falls 10%/23%/19% in FY15/16/17, and our NPV is down 11% to A$34ps (P/NPV 0.89x). Revised PE estimates are 16.2x/14.7x in FY16/17. We expect a dividend shortfall of ~US$1.9bn over FY15, with net debt rising to US$28.6bn by the end of FY16 (from US$25.8bn at the end of FY14).  Impact on RIO....
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Daily iron ore price update (round numbers)

anvil6-200x2001 Here are the iron ore charts for December 8, 2014: It's a very messy day. Paper made little sense with Dalian firm but Singapore smashed. Physical broke with tradition and followed Singapore plus more. Benchmark fell 1.7% to 69.70. Rebar average slowed but is only 3 points above new lows. The case that these round numbers ($90, $80, $70) are proving to be pivot points for steel mill buying is getting stronger. Each time we've reached one, mills have bought and sold around it, until another attack drags the the price $10 lower. IRC reckons $70 is the bottom: Prices are approaching the...
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Iron ore miners struggle as futures bounce

grhetr The big iron ore miners are struggling today after a weak London session. BHP and RIO are both bouncing around recent lows going nowhere. FMG is flat as well. The idiocy spreads are closing with FMG at new levels of sense and BHP starting to see the light as well. RIO remains the outstanding dunce of current pricing: The junior race of death is coming around the home turn: Dalian is up again today more than 1% to 494. Looks like we might push further away from $70 tomorrow. It will be interesting to see if that freezes...
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