Daily iron ore price update

Little change to today’s iron ore complex but our spread is now plus $10 between spot and 12m swaps. One is going to give shortly.

In news, Mitsui sees a $100 price floor in the year ahead:

“I think we saw the floor of it in the second quarter” ending Sept. 30, Iijima of Mitsui & Co. said at a briefing in Tokyo today. “Europe’s debt crisis is having an impact on Chinese exports. But, if the stimulus works we’ll see an upward trend in steel product prices.”

Iijima said China’s 1 trillion yuan ($160 billion) in state spending announced in September means the steel-making material is unlikely to drop below $100 a ton.

And here is glimpse of the type of ore project that will continue to attract funding. From The Australian:

JUNIOR Brazilian iron ore hopeful Centaurus Metals is bucking the trend of its larger peers and will push ahead with aggressive development after a study proved it will be a low-cost producer.

The bankable feasibility study, released yesterday, is forecasting cash operating costs of around $16 a tonne.

How could a $16 per tonne reserve not already be developed?

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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  1. You left out the good bit, Mitsui see $120 being supported on back of continuing stimulus.

    And an illustration of the sort of problems that need be conquered producing i/o out of Africa:

    “High moisture content is making the transport of iron-ore from Sierra Leone unsafe, causing extensive loading delays and could raise shipping costs for miners operating in the country, industry sources said…

    …Liquefaction has, in some instances, resulted in ships becoming unstable and led to them capsizing and sinking.
    Limited local expertise and technology, together with poor communications, are exacerbating the problem, the insurer said.”

    $120 generally.