Iron ore price

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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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More on Port Hedland madness

sdavffdev From Goldman Sachs: March has delivered another record month of production. The solid print for March was predominantly driven by: (1) FMG’s ramp up of Kings to 40mtpa; (2) ongoing optimization of BHP’s inner harbour and ramp up of Jimblebar; and assisted by (3) increased use of larger vessels; and the (4) absence of weather-related interruptions (c.f. 1.2 day March average). Top down vs bottom up – Forecasts in line For the major users of this port, BHP Billiton (BHP.AX), Fortescue Metals (FMG.AX), and Atlas Iron (AGO.AX), it provides a good barometer of iron ore export activity. For...
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Roy Hill “exploiting” 457 visas

imgres From the SMH, a whistleblower at Gina's Roy Hill says: ...up to 200 white-collar 457 visa workers, about half of whom are Korean nationals aged under 30, are clocking up more than 84 hours a week. Many are female. They are employed by the contractor Samsung C&T and being paid about $16 an hour, the union says. Many are not working in the occupations approved for their visas - a breach of the sponsoring employer's obligations, the CFMEU claims. Roy Hill has recently maintained that it was so inundated with job applications from locals that it did not need to use 457...
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Daily iron ore price update (Port Hedland mad!)

brwesb Here are the iron ore charts for April 4, 2014; It was a good day on Friday for iron ore. Paper markets were firm with Dalian leading and rebar futures up as well. In physical markets, rebar average continues its muted recovery, hinting at some underlying demand. Iron ore spot is stalled but well off its low.  Upsetting the party, the Baltic Dry capesize component fell another 1.5%. The big news, however, is the late Friday release of this baby: Port Hedland shipping volume figures for March were insane, up 38% year on year, 24% month on month, with China's largest ever...
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Daily iron ore price update (listless)

rvev Here are the iron ore charts for April 3, 2013:   Rebar futures were up a little. Baltic Dry capesize fell another 3%. Both physical and paper markets continue their weak up trends and that may roll on for a while. But I really do not expect much of the rebound given the Chinese stimulus is paltry and iron ore has already run far ahead of any improvement in steel mill profits. There's simply no reason to restock and current firming action looks like a chance to reset...
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Platts China steel index eases

ScreenHunter_07 Nov. 26 16.13 See above the April Platts steel sentiment index for April, which is kind of like Mac Bank's version except not as good.  This index needs a reboot. It'a headline reading is overly dependent upon new orders. Any indicating suggesting steel mill strength over the past six weeks has a wayward compass. In April, new orders are down a little but still strong, production has fallen sharply and mill destocking is the flavour the day. Rebar and Dalian futures are both up a little...
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Daily iron ore price update (sell the fact)

dvqda Here are the iron ore charts for April 2, 2014: Paper markets were weak across the board with rebar futures also falling some. Physical markets saw spot fall sharply but steel firm up a little. Baltic capesize fell another 3%. Whether this is the pause that refreshes or a return to slump is difficult to tell. My guess would be a balance of influences. The run in ore is far ahead of steel prices, the stimulus announcement looks luke warm and credit will remain tight but Pilbara strike action is still a possibility. From the ABC: Negotiations will resume next week in an attempt...
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BHP bleats as coking coal plunges

coking Coking coal has sunk to a spectacular new low of $105: That has BHP up in arms. From the AFR: Speaking in Brisbane on Wednesday, Mr Dalla Valle said a global company like BHP was well-placed to see the differences in cost across different nations. He said truck drivers at the Queensland coking coal mines were “1.5 times” more expensive thant ruck drivers on BHP’s mines in New Mexico, USA. “This highlights the productivity and cost challenge we have in Australia,” he said. “The world sets our prices, Australia sets our costs.” More misleading "he said, she said"...
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Masterchef iron ore magnate accused of fraud

imgres Awesome. From the IBT: Aaron Thomas, a former contestant on MasterChef Australia, has been slapped with a lawsuit by the very own company he founded. Mining firm Oakmont Resources alleged the former CEO embezzled $7.57 million from company money to fund his lavish lifestyle. Oakmont Resources said an internal investigation discovered Mr Thomas had spent $US30,000 on a luxury jet charter, $US171,000 on a Tiffany & Co engagement ring for his Brazilian fiancée and $US53,000 on an Australian holiday. Other expenses charged to the company include over $US91,000 spent in Las Vegas, a holiday...
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Iron ore miner downgrades begin

imgres JPMorgan has kicked-off the sell-side iron ore downgrades that, in my view, will flow all year: We are updating models to factor in lower YTD iron ore prices, with our revised profile implying a modest recovery in Q3 as better seasonal demand offsets expected supply additions. Despite reduced earnings forecasts for 2014, the FCF improvement theme remains intact for the iron ore majors. We continue to believe BHP & RIO will be in a position to initiate capital returns over the next 12 months, while FMG should be well placed to increase dividends significantly once net debt reduces. We remain...
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Daily iron ore rice update (tug boats)

iron ore Here are the iron ore charts for April 1, 2014: Mixed results in paper markets, then, with rebar futures eking out a tiny gain. But real demand clearly still stinks with steel prices going nowhere fast.  Physical markets aren't supported by the Baltic Dry, either, which has fallen another 2.5%. My guess is that the rally in spot has as much to do with the threat of tug boat strikes in Port Hedland as it does hopes for Chinese stimulus or any return of real steel demand. But that dispute could run for another month so who knows what effect it might have on spot over that...
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China steel PMI still weak

imgres China's  March steel PMI is out and is still weak, though up from February: headline rose to 42.2  from 39.9; output rose to 39.7  from 35.2; new orders rose to 46.1 from 32.4; new export orders fell to 48.6  from 52.3; inventories of finished goods fell to 53.2 from 63.3, and inventories of raw materials fell to 40.8  from 47.0  I would couch that as some chewing through of the...
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