Find below the iron ore p[rice table for March 4, 2103:
It’s interesting to note that local iron ore equities had another bad day yesterday despite the better price action. Perhaps equities are beginning to discount the future even if iron ore prices are not. Such would make sense.
There is more news today to absorb on the forthcoming glut. Morgan Stanley has made headlines with its reiterated call of a looming bear market:
Iron ore is heading toward its first surplus in at least a decade as output expands and Chinese steel mills, the biggest buyers, boost production at the slowest pace in five years.
Seaborne supply will advance 9.1 percent and demand 8.3 percent in 2013, led by exporters from Perth-based Fortescue Metals Group Ltd. (FMG) to Vale SA (VALE5), Morgan Stanley forecasts. A surplus will emerge in 2014 and keep widening until at least 2018, the bank predicts. Prices will slump as much as 34 percent to $90 a ton by the end of December, according to the median of seven analyst estimates compiled by Bloomberg.
More interesting to me is story from Peru that it too is joining the iron ore rush:
New iron ore projects and an expansion at Peru’s only iron ore mine, operated by Shougang Hierro Perú, will increase the country’s production in 2016 by approximately 460% compared to current levels of around 10Mt/y, almost entirely destined for foreign markets.
Although sector players have suggested production could be absorbed by the local steel sector, BCP analyst María Teresa Sarmiento expects iron ore production to continue to be exported.
“At the moment, the production systems used by both steel producers in Peru [Aceros Arequipa and Siderperú] don’t really depend on iron ore production,” Sarmiento said in an interview with BNamericas. Therefore, until Peru’s steel producers’ change their production systems, or new producers enter the scene, iron ore will continue to be exported, she said.
American-Chinese CDII Minerals has shown interest in operating new steel projects in Peru that would source local iron ore production, but CDII VP Ross Friedman told BNamericas that such plans will not developed for at least another 5-10 years.
Shougang’s US$1.2bn expansion expects to double production at its Marcona mine to 20Mt/y by mid-2014, and it will remain Peru’s only iron ore miner until 2015 when a stream of new producers look to enter the scene.
Chinese Ninjinzhao Group’s US$3.3bn Pampa de Pongo project in Arequipa region will add 15Mt/y production in 2015, followed by an additional 1.4Mt/y in 2016 predicted to come from joint projects between CDII Minerals and Peruvian miner Mapsa.
Additionally, Strike Resources’ (ASX: SRK) US$2.3bn Hierro Apurímac project estimates annual output of 20Mt, but has yet to determine when production would begin.
So that’s another replacement for Indian supply coming online in the next two years.
For now, though, there is some good news with March Port Hedland shipping statistics proving strong at 25 million tonnes give or take, the second highest month on record behind last December’s 26 million tonnes.
For the time being at least, volumes are serving to mitigate price declines.
