Iron ore price

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More on the biblical iron ore flood

io From Westpac's Robert Rennie: Last week's iron ore quarterly production data from Australia's 'big three' miners proved to be something of a mixed affair. As the first chart below notes combined WA iron ore production from BHP, Rio and FMG came in at 127mt, down from 131mt in the previous quarter. This represents a 2.9% drop in production versus the 4th calendar quarter of 2013. This took the annual rolling sum of Australian iron ore production to a fresh record high of 520mt. Ordinarily, this might be a source of concern for some. However, iron ore production in Australia tends to be...
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Goldman: Mining’s future is cost cuts

GS Here's a timely report by Goldman Sachs supporting my spray at iron ore delusion this morning: Time to digest an investment binge in excess of US$2 trillion We have long argued that commodity supply cycles can be divided into investment and exploitation phases that create a full 20-30 year supply cycle. In the decade to 2012, commodity markets were in an investment phase, characterized by rising prices and, more importantly, attractive returns for producers that induced investment in new capacity, which eventually overwhelmed demand growth and created an exploitation phase, where the market...
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Iron ore enters late cycle delusion

.kjbjub Delusion appears to have seized iron ore markets. In recent days we've had Padbury Mining and its fantastic backer, Colin Barnett selling the same revival of Oakajee via Asian dough and now BHP is out selling the idea of more greenfields developments for the Pilbara. BHP Billiton iron ore president Jimmy Wilson at the official opening of its new Jimblebar mine reckons: ...greenfield mine developments are still possible in Western Australia this decade, even though the sector has crimped capital spending to shift focus on boosting production from existing assets. ...Jimblebar delivers 35 million...
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Andrew Forrest as Nietzschean ubermensch

imgres The entrepreneur as Nietzschean ubermensch is one of the more unfortunate features of contemporary business journalism. It is generally an ignominious experience for the writer, misses the real tensions and lessons in the entrepreneurial process and, worse, universally suppresses the function of markets in favour of the incumbent, ironically debilitating the core usefulness of capitalism. Today we have an example at the AFR where Julie-Anne Sprague offers some nice texture on Andrew Forrest but misses the real point of the story of Fortescue: In a rare one-on-one interview, Forrest opens up...
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Daily iron ore price update (Goan delays)

edfgvwed Here are the iron ore price charts for April 23, 2014:   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: “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...
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Padbury’s mystery man revealed

imgres From the ASX, Padbury Mining has confirmed that Roland Bleyer  is the mysterious private equity player behind the $6.4 billion deal to resuscitate the Oakajee iron ore project. Padbury has extended its trading halt. From The Oz recently: It might have been just another TV interview, save for the fact that a well-lubricated Willesee slurred his words and used the phrase “bullshit artist” as he questioned Mr Bleyer, who at the time ran a chain of hair regrowth, weight loss and cosmetic surgery clinics. I should have offered to fund it...
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Daily iron ore price update (weak)

images Sorry this is late today. Data issues. Here are the iron ore price charts for April 22, 2014:   Paper markets were weakish though rebar futures managed a small gain. Physical was weak too although the Baltic Dry capesize component finally climbed 1.5%. Nothing much to say today except prices look biased lower...
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World steel production rebounds

Production From the World Steel Association comes strong March production figures: World crude steel production for the 65 countries reporting to the World Steel Association (worldsteel) was 141 million tonnes (Mt) in March 2014, an increase of 2.7% compared to March 2013. In the first three months of 2014, Asia produced 274.0 Mt of crude steel, an increase of 2.6% over the first quarter of 2013. The EU produced 43.8 Mt of crude steel in the first quarter of 2014, up by 6.7% compared to the same quarter of 2013. North America’s crude steel production in the first three months of 2014 was 29.9 Mt, an...
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Understanding China’s great pile of ore

search From Platts: Chinese iron ore importers on Monday denied they were under pressure to sell their port stocks so that they repay their debts to the country's banks, refuting recent local media reports. The importers added that the price of the more than 100 million mt of iron ore inventories across the Chinese ports, was unlikely to plunge in the near term because they were not under pressure to sell. ...Market sources, however, admitted that the Chinese banks have been more cautious this year in both issuing letters of credit and raising the loan amounts to steel and iron ore trading houses....
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Padbury’s bad company

images From The Australian over the long weekend: SYDNEY entrepreneur Roland Frank Bleyer first came to ­national attention in 1985 when TV host Mike Willesee grilled him on air over a business that was using animal foetal cells to treat children with Down syndrome. It might have been just another TV interview, save for the fact that a well-lubricated Willesee slurred his words and used the phrase “bullshit artist” as he questioned Mr Bleyer, who at the time ran a chain of hair regrowth, weight loss and cosmetic surgery clinics. Three decades later, the Rolls Royce-driving Mr Bleyer is again...
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Daily iron ore price update (down, down, down)

images Here are the iron ore charts for April 21, 2014:   The top is in. Paper markets have rolled. Rebar futures are almost back to recent lows. Physical is closely following. The Baltic Dry capesize component fell another 5% over the long weekend and rebar average has peaked. Port stocks appear to have topped too but my guess is that's happening simply because storage is full. That's raises the prospect of more pressure on spot because financing deals will be more difficult and expensive to execute. Reuters has texture: "Demand will be picking up gradually in May, but...
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Daily iron ore price update (FMG fire sale)

trebtr Here are the iron ore charts for April 16, 2014: And so the paper market weakness rolls on. None of these charts look especially comforting and may all be forming head and shoulders top patterns. Rebar futures fell sharply too. In physical it's increasingly as bad with the rebar recovering stalling and the Baltic Dry capezise component crashing 6.5%. Basically, the restock is over, supply is abundant, demand mediocre and the prospects of greater stimulus slim. Not a very nice combination. I will draw attention to the last few days of major iron ore miner production reports and...
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FMG misses big on production

search Fortescue's March production report is out is clearly the worst of the big three: Completion of US$9.2 billion expansion of port, rail and mining operations to achieve production capacity of 155mtpa. • The 40mtpa Kings Valley project was opened in March 2014 following commissioning of the ore processing facility (OPF) which was constructed in record time, taking only 179 days from assembly of first steel to completion. • Achieved targeted 155 million tonne (mt) per annum annualised rate during March 2014. • Record shipments of 31.5mt achieved in the March 2014 quarter, lifting financial...
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BHP iron ore production beats

images BHP has shown up Rio's thin weather excuse yesterday with boom quarter of iron ore production on good weather and annual output upgrade: BHP Billiton maintained strong momentum in the nine months ended March 2014 with record production achieved for four commodities and at 10 operations. Strong operating performance throughout the period, the relatively limited impact of the wet season and the continued ramp-up of Jimblebar underpinned record production at Western Australia Iron Ore of 163 million tonnes (100% basis). Full-year production guidance has been raised by a further five million...
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Daily iron ore price update (Rio bears-up)

dfva Here are the iron ore price charts for April 15, 2014: Paper markets continued their stall with rebar futures flat. Physical is becalmed too and the Baltic Dry capesize component fell another 2%. Rebar offers hope jumping again but there is some weirdness in my data so that may have been the day before and yesterday flattish. Reuters has texture: "The general market sentiment remains weak amid gloomy expectations for first-quarter economic growth, which keeps denting steel demand and prices," said Xia Junyan, an analyst with Wanda Futures in Shanghai. "I don't expect any big...
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Rio iron ore production misses

images Rio's first quarter production report was out earlier today and was a fizzer: Rio Tinto chief executive Sam Walsh said “Rio Tinto has started the year with a series of performance records as we continue to drive productivity gains across our operations. Our Pilbara iron ore business has again set new benchmarks for production, shipments and rail volumes for the first quarter and we are well on track to reach nameplate capacity of 290Mt/a by the end of the first half of 2014. Our mined copper production benefited from higher ore grades at Kennecott Utah Copper and production ramp up at Oyu Tolgoi...
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Will iron ore crash in the second half?

gwegw Reuters has a piece today that's stirring up some MSM fuss in implying iron ore could still crash owing to credit limits: Commodities such as copper and rubber have been commonly used for financing, where traders or investors borrow against the commodity with the aim of investing the money in high-return areas such as real estate. But Beijing's credit tightening has spurred investors desperate for cash to turn to iron ore. Industry sources familiar with the practice estimate some 30 million tonnes or $US3.5 billion of stocks are now tied up by financing. ..."You cannot stockpile iron ore too...
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Padbury plays possum on Oakajee backer

images From the AFR: The mining junior that claimed to have sourced $6 billion worth of funding from a mystery backer has broken its promise to reveal full details of the money this morning. Padbury Mining raised eyebrows on Friday when it told the ASX it had sourced $6 billion to revive the failed Oakajee port and rail project in Western Australia. ...Padbury said it would do so by Tuesday morning, but in a fresh statement to the ASX overnight, the company said it could not reveal the identity of its backer until Thursday; the last trading day before the Easter long weekend. Given...
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Daily iron ore price update (rebar rocket)

dfbfdeb Here are the iron ore charts for April 14, 2014: Iron ore paper market softness continues. Physical is more firm, supported by the rebound in steel prices. Rebar futures fell a little and that market is moving into backwardation. The Baltic Dry capesize component fell 1.5% yesterday. Reuters has texture: "I think seasonal demand will not provide much support for steel prices because production remains the same. Overcapacity is the key issue and if that's not solved, that means you will never be able to see a sustained increase in steel and iron ore prices," said a trader in...
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Australia’s remarkable iron ore dominance

iron ore Here's a remarkable chart from Deutsche showing how Australia captured by far the largest share all of the China boom upside for iron ore: One advantage in being a quasi-banana republic is that there are relatively fewer impediments to swift development. It's a shame what happens you try to keep a fair share of the profits,...
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The great coal whinge

imgres Anyone reading the weekend papers cannot have missed the great coal whinge that was led by The Australian: THE world’s biggest miners have united in sounding the alarm that Australia’s $60 billion coal sector is under extreme pressure, with global giant Rio Tinto warning the industry is “staring down the barrel”. Harry Kenyon-Slaney, chief executive of Rio Tinto’s energy product group, says the sector is facing a wide range of challenges: lower prices, the strong Australian dollar, high taxes, increasing regulations, delays in gov­­ern­ment approvals and community opposition to...
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Oakajee revival “dubious”

imgres Late Friday news broke that: Investors have shown interest in a highly unusual $6 billion equity deal this morning that is being spruiked by junior miner Padbury Mining. Despite starting the week with a landlocked, marginal iron ore project, and a market capitalisation below $70 million, Padbury has today told the ASX that it has raised $6 billion to build and operate a new version of the failed Oakajee Port and Rail project in Western Austdralia. ...The Oakajee port and rail project has been tried and failed several times, with Mitsubishi Development most recently abandoning it in...
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India readies iron ore re-entry

images From India's Business Standard: Iron ore exports from India are likely to exceed 25 million tonnes in 2014-15, a growth of over 60% compared to last year. In 2013-14, iron ore exports clocked 15.13 million tonnes, a decline of 19% over the previous year. The growth in exports this year would mainly come from Goa, where the Supreme Court has allowed auction of around 15 million tonnes. The Apex Court is also expected to pave way for resumption of mining in the current year. The Court is set to pass an order on the recommendation of CEC for a cap of 20 million tonnes production per annum on...
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Daily iron ore price update (restock over?)

images Here are the iron ore price charts for April 11, 2014: Not much fun in paper markets with rebar futures down as well. Physical was worse for both iron ore and steel and the Baltic Dry capesize component fell another 4%: It's still at moderate levels but falling fast. Chinese port stocks also rebounded last week to just short of a record at 108.2 million tonnes: The news was poor too with CISA high frequency daily steel production falling in the late March period: In late March this year, the average aggregate daily crude steel output in China was approx. 2.073 million...
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Mac Bank’s iron ore confession

images Iron ore has a habit of making a goose out of analysts. It happened to me early last year when India pulled the pin and saved the market. It happened to UBS later in the year when a forecast crash turned into a price spike. And it's happening right now to Mac Bank's excellent Graeme Train. Here is his confession: Combining the three sets of inventory data we can attempt a much more complete assessment of iron ore inventory in China. On our numbers, there was a total of 132mt of stock at these key points in the chain by the end of March, equivalent to ~45 days of consumption. What also becomes...
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The Hewitt junket glides into China

images At the AFR, Jennifer Hewitt is living the high life. Fresh from a splendid Australian Petroleum Production & Exploration Association funded trip to Perth, she's travelled: ...to Boao as a guest of Fortescue Metals Group. I'm not actually sure what it means to be a guest of FMG. Perhaps the paper could be more specific. Hewitt's panegyric journalism has soared to new heights: Chinese Premier Li Keqiang didn’t exactly say his country was “open for business”. He didn’t need to. No one could mistake his blunt message of reform – including Tony Abbott, sitting next to him in the...
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Daily iron ore price update (stall)

rbwer Here are the iron ore charts for April 10, 2014: A stall for paper markets, then, with rebar futures also falling. In physical, the rebar average had another good day but that is already well and truly priced in broader markets. Iron spot was only marginally weaker which, given the lousy China data and government reassurances of no stimulus, is probably pretty firm. The Baltic Dry capesize component continues its unholy plunge, down another 4% and now down 20%+ in three days from levels that were moderate to being with. I continue to expect a stall in the rally in short...
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March of the iron ore bears

imgres The iron ore bears are queuing up this morning. From Bloomie, there's Goldman: Australia, the largest supplier, sent 504 ships from Port Hedland during the first quarter carrying enough iron-ore exports to build more than 700 Golden Gate Bridges. Shipments jumped 35 percent to the biggest buyer, China, where inventories have ballooned to the highest ever. ...“Supply growth will overtake demand growth this year for the first time in a long time,” said Christian Lelong, a Sydney-based commodity analyst with Goldman Sachs Group Inc., which predicts prices to average $108 this year and slide to...
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Iron ore futures fall as China fudges growth target

china-slow-down-red-flag-sign Speaking at the Bo'ao Forum today, Chinese Premier Li Keqiang said in the opening speech that the government would not be roling out stimulus and that it was: ...more concerned about the sustainable development of the Chinese economy. “The target GDP growth rate for the Chinese economy is about 7.5 per cent. Because we said it was 'about' 7.5 per cent, it means there is room for fluctuation," Premier Li told a gathering of international political and business elites including the Australian delegation. "It does not matter whether it grows faster than 7.5 per cent, or slower than that. As...
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World Steel sees China fade

dfsd From the World Steel Association today: The World Steel Association (worldsteel) today released its Short Range Outlook (SRO) for 2014 and 2015. worldsteel forecasts that global apparent steel use will increase by 3.1% to 1,527 Mt in 2014 following growth of 3.6% in 2013. In 2015, it is forecast that world steel demand will grow further by 3.3% and will reach 1,576 Mt. Chairman of worldsteel Economics Committee, Mr Hans Jürgen Kerkhoff said “In 2013 world steel demand grew higher than our previous forecasts due to a stronger than expected performance in the developed world in the second half...
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Daily iron ore price update (rebar!)

sdfsds Something of a reversal of recent fortunes with paper markets pausing (rebar futures eased) and physical leading. The 1% jump in rebar average shows at last some final demand finally appearing. However, it's got a long way to go yet and the Baltic Dry capesize component fell another 4%. Reuters offers texture: China's pledge to speed up spending on railway projects to aid a slowing economy has fueled recent gains in steel prices in the world's biggest consumer of the alloy along with a seasonal pickup in demand. "Mills have more incentive now to sustain their production so...
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Weak Chinese steel output persists

defgs To underline my point this morning that Chinese steel production remains weak and there's little evidence of a rebound in demand despite stimulus-excited iron ore markets, here some more from Citi: For the iron ore producers China’s steel production/demand is the all-consuming barometer of sector health given China imports ~70% of iron ore requirements and represents a similar amount of the seaborne market. On this front there is no denying that 1Q14 has been a weak start to the year after the typical recovery post Chinese New Year failed to eventuate. In 1Q14 Chinese steel production was...
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Daily iron ore price update (Baltic smash)

sdcfsad Here are the iron ore charts for April 8, 2014: Decent paper market action with all futures are swaps up. Physical is more mixed with spot firm but the rebar recovery is a complete joke and is indicating still very poor steel demand. Also, the Baltic Dry capesize component was poll-axed 11.5% yesterday. There is some evidence of better steel demand, from Reuters: Inventory of trader-held steel products in China, the world's biggest consumer, has fallen by nearly 2 million tonnes in the past five weeks, reflecting firmer demand. Consumption may strengthen further through May when...
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Iron ore majors quarterly previews

images From UBS's excellent Glyn Lawcock  today come previews of miner quarterly reports. For BHP: The March quarter is generally a weaker quarter for the miners, in particular BHP Billiton given the wet season that prevails across the top end of Australia. Seasonally cyclonic conditions exist across the QLD Coal fields and the West Australian iron ore region which coupled with the miners propensity to schedule planned maintenance in the quarter has traditionally lead to lower bulk commodity output. We forecast WA iron ore production (100%) to drop back slightly to 53.0Mt from 53.6Mt in DQ 13,...
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Daily iron ore update (restock)

efvae Here are the iron ore charts for April 7, 2014:     So, now we're seeing some momentum in paper and physical prices (sorry, some prices not updating this morning). I have no idea why mills are chasing prices higher but they are so don't argue. The Baltic Dry capesize fell a little yesterday and it remains at levels synonymous will reasonable demand but not restocking:   One reason for the buying may still be possible Port Hedland industrial action: The risk of strikes at Port Hedland has escalated, after two more unions ­representing tugboat workers sought...
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