Daily iron ore price update (Rio booms)

by Chris Becker

Iron ore prices continue to slide with both spot and futures markets putting in a sixth straight loss. Port inventories rose to just over 145 million tonnes last week, the highest since September 2018, but steel demand should kick in soon.

Texture from Reuters:

The spring period beginning in March, after China’s Lunar New Year holiday, “is generally the peak season for steel products demand,” said Zhao Xiaobo, an analyst with Sinosteel Futures in Beijing, adding that there should be a high concentration of construction sites starting work next month.

Meanwhile, Rio Tinto posted its results yesterday with a 56% surge in profit and a nice dividend for shareholders, albeit funded more from asset sales rather than underlying profit, although the latest surge in iron ore prices at the expense of its competitor Vale should shore the balance sheet a bit more for FY2019.


More from ABC, including its latest missives on climate change action:

Rio Tinto is the latest company, following other industry giants such as Fortescue Metals and Yancoal, to have unveiled special dividends to shareholders in their latest financial updates.

The company warned that the commodity price impacts would be significant, especially for its Pilbara iron ore.

It said limiting global warming to 2C above pre-industrial levels raised questions about the ability of steel producers to decarbonise at an affordable cost to consumers.

“There is large uncertainty around how the steel production sector will decarbonise in the long run, which could materially affect the value of Rio Tinto’s iron ore business,” it said.

“In addition to an escalation of the severity of the medium-term impacts, there is a need to plan for greater frequency and intensity of cyclones on the Pilbara coast.”

But it foreshadowed increased demand for copper and other battery materials due to greater focus on electrification.

It said emission-reduction policies were likely to increase aluminium prices. This would benefit low-cost, low-carbon producers but put greater pressure on coal-based smelters as well as the refineries supporting them, it said.