Find below the iron ore price table for April 17, 2013 (sorry it’s late, data issues):
Looks like real underlying demand is pretty solid but markets are pricing for the future of oversupply.
News today confirms it, Altas Iron boss Ken Brinsden gives it to the bears:
Mr Brinsden said the investment community’s view on the iron ore market was “too negative”, adding that its quarterly report, released yesterday, showed how healthy the sector was.
“I just returned from China late last week and there was nothing to indicate in our view that China is coming to a halt or there is some form of hard landing to emerge there,” he said.
…”We think generally there has been a gross over-reaction to the negative about where iron ore markets are headed,” he said.
“The starkest contrast I could draw is to say that in our quarterly report we are generating strong operating cashflow from our mines. The so-called specialists are over-stating what is possible on the supply side.”
Mr Brinsden said there weren’t many people in China who were of the belief that the price of iron ore was headed to $US80 a tonne, as some analysts had forecast.
“There is a massive disconnect in comparison to where the investment community is at with respect to where iron ore is heading,” he said.
“We are looking forward to healthy prices for a period to come.”
Actually, it is Atlas’ excellent quarterly report that is the problem, in a metaphoric sense. Here again is the chart of long term seaborne iron ore demand and supply:
The blue line is Morgan Stanley’s current, still aggressive, Chinese demand forecasts. The red line is MB’s still fairy aggressive growth trend. The green line is scheduled supply expansion, including by Atlas which produces at $50 per tonne cash cost more or less. Add another $15-20 for delivery and you can see why $80 ain’t too attractive for Mr Brinsden.
But the chart is a no-brainer and is why the markets have no faith in the utterances of bullish iron ore miners these days. Much better for credibility is BHP’s conservative approach. From the AFR:
Incoming BHP Billiton chief executive Andrew Mackenzie is poised to stamp his authority on the world’s largest mining company by making major changes to management of the $159 billion company.
BHP is expected to make an announcement as early as Thursday, more than three weeks before Mr Mackenzie is due to take the helm from Marius Kloppers on May 10.
It is understood Mr Mackenzie plans to announces changes to the senior executive team as well the structure of some business units.
BHP on Wednesday said it was confident it could produce iron ore and petroleum at record levels in the June quarter to meet its full-year guidance after poor weather led it to report March quarter production figures slightly below expectations.
