Brazil’s Vale has announced further cuts to its planned iron ore expansions. From the Globe and Mail: Brazil’s Vale SA , the world’s second-largest mining company, cut estimated 2013 capital spending by 24 per cent after a global slowdown and a drop in iron ore prices led the company to rethink its outlook for expansion.
Here is the the iron ore price complex chart for December 3, 2012: Spot still resilient, really, with some hope as well that swaps have bottomed. Not so long as Chinese steel prices keep falling, however. In some good news for the bulks and beleaguered thermal coal miners, it looks like a breakout from the recent
Things are not looking good for the iron ore juniors. From BS: Shares in Sundance Resources remain in a trading halt, as a potential takeover deal with suitor Hanlong Mining appears to be falling apart. Sundance released a statement on Monday saying Hanlong wanted to delay the deal because it could not secure credit approval
From ANZ: Last week Newcastle physical thermal coal prices were up 2.5%, but iron ore and coking coal prices fell 2.8%. Australian thermal coal prices gained on improved activity on-screen ahead of January annual term talks between producers and Japanese utilities. Traders were reportedly covering short positions ahead of year-end. Premium hard coking coal prices ended the week lower, in line
Find above the iron ore price table for November 30. As you can see, the slide is gathering pace, especially in China where rebar is now crashing towards its low for the year: Given this, the spot price is still dramatically out-performing: The percentage spreads between spot and swap and spot and rebar thus remain
Courtesy of ANZ. ANZ Commodity Daily 754 301112.pdf
Above is the iron ore complex table for November 29. As you can see, falls in the broader markets continue to outpace the spot price. In the past this pattern has preceded big falls in spot as it capitulates suddenly, falling absolutely, as well as closing the spread to swaps. In news today, as we
Courtesy of ANZ. ANZ Commodity Daily 753 291112
But what exactly? The AFR and BS are reporting it’s all about productivity: Rio said it had boosted the size of the expansion plans to 360 million tonnes from 353 million tonnes previously through de-bottlenecking and productivity improvements with minimal spend. It has a current production capacity of 237 million tonnes and expects to reach 360 million
The news continued to be poor in the iron ore complex yesterday: Although spot held up, it’s on its Pat Malone and it won’t last. The caning of rebar is especially a concern and it is quite clear that the restock is done, not just in ore but it appears steel as well: The refusal
Courtesy of ANZ. ANZ Commodity Daily 752 281112.pdf
BREE (Bureau of Resources and Energy Projects) has released its much anticipated major projects update and although the numbers are epic, the peak is very much in sight. Just to confuse, BREE has introduced a methodology, making like for like comparisons with past reports difficult: This release of the Resources and Energy Major Projects report
Here is today’s iron ore complex chart, where the correction continues: And the chart: Still no spread compression, which tends to happen during decent corrections, so plenty more downside potential for spot. Today’s news is the fightback offered by Fortescue’s CEO, Nev Power, yesterday. From The Australian: FORTESCUE Metals Group chief executive Nev Power has
Courtesy of ANZ. ANZ Commodity Daily 751 271112
Here is today’s iron ore complex chart: And the ore chart: As well as steel chart: The restock and rebound is over for steel and iron ore seemingly. This may be seasonal, coming into the slower winter months, but the falls in the 12m swap speak volumes to me. This has been a very weak
Courtesy of ANZ. ANZ Commodity Daily 750 261112
Here is Friday’s iron ore complex price table: And the chart: And Chinese steel: Rebar’s roll over does not bode well for short term prices. Neither do the key spread charts. First, ore to rebar in percent, which is too low: And ore to 12m swap is too high for the $120 price level: Definitely
By Leith van Onselen The Sunday Age/SMH ran two articles picking-up on the looming threat to Australian coal and gas exports caused by the shale oil and gas boom currently gathering pace in the US. First, here’s David Pott’s take on the situation (my emphasis): …our sovereign debt is low by global standards, but it’s
Courtesy of ANZ. ANZ Commodity Daily 749 231112
And down she goes. Where it stops nobody knows! And despite yesterday’s nice bounce in China’s Flash PMI too. I suspect there’s way to go down here. 5-10% is not out of the question based upon my spread charts, which both look stretched. Ore versus rebar: And spot versus swap:
Courtesy of ANZ: Reports suggest Chinese buyers had defaulted on three Australian thermal coal imports and some from South Africa, but are unlikely to spark a wave of cancellations (that we saw in May/June). We remain cautious – China’s domestic stockpiles at power plants are high and many traders in China could face tight liquidity
A quiet day yesterday in the ore complex, although the 12m swap softening is not great. It looks well and truly stuck. No news today but it’s worth reiterating yesterday’s story in the AFR about China’s move to protect local ore miners: China is looking to halve the tax rate paid by its domestic iron
Courtesy of ANZ. ANZ Commodity Daily 747 211112
Missed this earlier. I have warned that the assumption by Australian miners, sell-side analysts and government – pretty much everybody – that the Chinese will lie down and let foreign imports displace local ore production is just a little naive. And now we have the proof. From the AFR (h/t NM): China is looking to
A poor day yesterday across the ore complex with falls in Chinese steel leading iron ore spot and swaps lower. Here’s the ore chart: And steel prices: As I’ve been warning for a week or so, all of my metrics are overstretched. Unless rebar bounces the rally is done. Interestingly, rebar is falling even as
From the AFR: Nathan Tinkler’s private company, Mulsanne Resources, has been placed in liquidation after it failed to settle a $28.4 million equity placement bill with Queensland coal developer Blackwood Corp. The more things change…
All quiet on the eastern front… Here is the chart I promised yesterday, the spread between the 12m swap and spot price expressed as a percentage of spot: Oh yeh, the rally is out of room, in fact, overshot already.
Late yesterday, CBA produced a note with the combined resources of its economics, commodities, currency and equities teams that argued that: With commodity prices off recent highs a question is being asked is, “Is the resource boom over?” We put that question to CBA’s Economics, Currency,Commodity and Equities research teams. They conclude that the resource boom is a
Courtesy of ANZ. Newc FOB physical thermal coal and Australia FOB coking coal prices firmed last week, with Asia demand showing signs of improvement for early next year loadings. Reports suggest traders were covering their short positions before closing their books or the year and ahead of Xstrata’s annual negotiations with Japanese utilities for thermal coal contracts starting in January. Reports
Here is Friday’s iron ore price table: And the ore price chart: As well as Chinese coastal bulk shipping rates: It’s good news for thermal coal basically, which continues its nice rally on better Chinese electricity generation. For iron ore, the topping pressure is still there in our spreads. First, the 12m swap/spot spread looks
