Commodities

2

Fortescue’s discounting disaster deepens

From FMG’s September QTR production report: • Steel output in China remained at near record levels during the September 2017 quarter maintaining the strong demand for iron ore. Steel mill profitability has also remained at historically high levels and continues to incentivise blast furnaces to maximise production supporting the premium for higher grade iron ore.

4

Daily iron ore price update ($60)

Iron ore price charts for October 25, 2017: Tianjin benchmark fell 60 cents to $61.10. It is trying to hang on to $60. Paper was soft. Steel strong. Reuters has texture: Mills in northern Chinese cities are reducing production in line with the government’s orders to limit pollution over winter, helping steel prices climb 6

5

Great Caterpillar recession ends with a bang

Via Caterpillar: Caterpillar continues to see strength in a number of industries and regions, including construction in China, on-shore oil and gas in North America, and increased capital investments by mining customers. We are working with our supply chain to increase production levels to satisfy customer demand for those markets that have improved. In July 2017, Caterpillar

3

Daily iron ore price update (China data and outlook correction)

Iron ore price charts for October 23, 2017: Tianjin benchmark fell 50 cents to $60.30. Paper stable overnight. Steel the same yesterday. Port stocks rose 800kt to 132.15mt last week. First, a  confession. I’ve made a mistake. In the recent China September data dump I accidentally dropped the wrong data point into my China construction

9

LNG jokers burn $4.5bn for fun

Via The Australian comes the marvel of Australia’s LNG boom: The huge impact of the OPEC oil cartel’s battle with US shale producers has been starkly revealed in a national industry survey that says Australia’s oil and gas industry logged a combined 2015-16 underlying net loss (excluding writedowns) of $4.5 billion. The results of the

3

Daily iron ore price update (growth crunch)

Tianjin benchmark up $1.2 or 2% to $60.80. Paper lost most of Friday gains overnight. Steel futures were strong. In news, China’s NDRC hosed off growth expectations Friday: China has forced 28 cities in smog-prone northern regions to reduce emissions of airborne particles known as PM2.5 by at least 15 percent from October to March

2

Daily iron ore price update ($50s)

Iron ore price charts for October 20, 2017: Tianjin benchmark fell $2.1 or 3.4% to $59.6. Paper held on overnight. Steel fell. In news, the winter shutdowns crashed the Platts steel sentiment index, via Bloomie: “We expect strict enforcement of the winter supply-cut policies in order to guarantee planned reductions in pollution,” Citigroup Inc. analysts

1

Daily iron ore price update (Xi splat)

Iron ore price charts for October 18, 2017: Tianjin benchmark was unchanged at $61.70. Paper cracked overnight. Steel fell a little. Xi Jinping appears to have disappointed Dalian.  Reuters has texture: Market participants are also watching the Communist Party congress with President Xi Jinping saying China’s campaign against corruption has achieved “overwhelming momentum” as the

0

Daily iron ore price update ($40s)

Iron ore price charts for October 17, 2017: Tianjin benchmark  fell 70 cents to $61.70. Paper took off overnight. Coking futures and physical and are stuck around $180. Steel is stalled. CISA output for late April was up 1.1% to 1.87mt with no sign of any shutdowns yet. Bloomie has some more on the outlook: “The

3

RIO pumps iron ore hard

From RIO’s third QTR production report: Pilbara operations Pilbara operations produced 241.9 million tonnes (Rio Tinto share 198.4 million tonnes) in the first nine months of 2017, one per cent lower than the same period of 2016, mainly due to weather disruptions in the first half of the year. Third quarter production of 85.0 million

2

Daily iron ore price update (flame out)

Iron ore price charts for October 16, 2017: Tianjin benchmark lifted 4.5% to $62.4o. Paper gave it all back overnight. Steel futures rose a bit yesterday. Port stocks fell 2.5mt last week to 130.35mt. Nothing changed for me. The path of least resistance still seems lower on the basic guess that winter shutdowns will balance

12

Greens declare war on Adani

A bit of ticker finally from the The Greens, via The Australian: Greens leader Richard Di Natale says he’s prepared to stand in front of bulldozers and get arrested to stop Queensland’s Adani mine, and expects to be joined by many thousands of Australians. Predicting the protest action would be bigger than that which stopped

1

Daily iron price update (saved by coal)

Iron ore price charts for October 12, 2017: Tianjin benchmark fell 40 cents to $57.40. Steel futures caught up to some Golden Week losses. Coking coal is saving the complex. Reuters explains: Northern China’s Shanxi province, the country’s top coal producing region, will aim to cut concentrations of hazardous airborne particles known as PM2.5 by

2

Daily iron ore price update (uh oh)

Iron ore price charts for October 11, 2017: Tianjin benchmark was hit $1.30 to $57.80. Dalian held on overnight. Coking coal did better as plant shutdowns help it. Steel futures are breaking down. Reuters has texture: Inventory of rebar, a construction steel product, among Chinese traders rose by more than 250,000 tonnes from Sept. 29

3

Iron ore market balance tips heavily bearish

Some numbers today on bulk commodity third quarter shipments. Via UBS, first BHP: Iron ore shipments for the quarter from WAIO are forecast to be down ~11% sequentially at 63.6Mt (100% basis) based on vessel movements. This reflects scheduled port maintenance on BHP’s berths during the quarter at Port Hedland. Global iron ore production (equity)

0

Daily iron ore price update (into the unknown)

Iron ore price charts for October 9, 2017: Tianjin benchmark fell 10 cents to $61.60, outdoing paper which firmed slightly overnight. Coking coal is falling fast. CISA mid-September output was easing as normal. The winter shutdowns are all the rage now, via Reuters: Chinese authorities have ordered heavily air-polluting industries including steel to curb output

17

Aussies oppose Adani. So why are politicians persisting?

By Leith van Onselen Over the weekend, thousands of Australians across the country joined protests against the Adani Carmichael mega-coal project. From The ABC: Rallies in locations including Sydney, Brisbane, Melbourne, the Gold Coast and Port Douglas in North Queensland heard messages against Indian company Adani’s proposed mine in the Galilee Basin… Protesters spelled out

13

Why is Australia still pursuing the Adani white elephant?

Cross-posted from The Conversation: Why, if Adani’s gigantic Carmichael coal project is so on-the-nose for the banks and so environmentally destructive, are the federal and Queensland governments so avid in their support of it? Once again the absurdity of building the world’s biggest new thermal coal mine was put in stark relief on Monday evening

3

Daily iron ore price update (glooom)

Physical iron ore trade resumed yesterday with a whimper as Qingdao fell to $61.34 and Tianjin benchmark shed 30 cents to $61.20: Paper markets are still closed but CISA released mid-September major steel output data which fell 1% to 1.85mt per day: Pretty normal so no insight into shutdowns there yet. We also saw Port

7

Dispelling OBOR myths

From Mornginstar: Much has been written about China’s Belt and Road Initiative but Morningstar equity analysts think much of the overwhelmingly positive commentary lacks context and is wide of the mark. Major iron ore miners such as BHP Billiton (BLT), Rio Tinto (RIO), and Fortescue (FMG) all expect BRI to drive further growth in steel

1

Break the gas cartel or pay!

Via the AFR: …prices could be higher based on the spot Asian LNG price for the first quarter next year, translating to at least $11 a gigajoule for a large manufacturer in Victoria, and even more for a smaller one, said Mark Samter, energy analyst at Credit Suisse. The analysts are among energy market watchers that

0

Daily iron ore price update (Roy Hill)

A couple of stories today are important as China remains closed for Golden Week. Iron ore paper and physical are not trading and SGX has been running around on the spot: Last week’s iron ore port stocks jumped 2.75mt to 133.6mt: That is obviously a bearish signal coming into the break vis shutdowns dampening iron

1

RBA commodity price index flat in September

By Leith van Onselen The RBA has released its commodity price index for September, which registered no change in either SDR (currency weighted) terms – the key determinant of the terms-of-trade – or in Australian dollar terms: Preliminary estimates for September indicate that the index was unchanged (on a monthly average basis) in SDR terms,

12

Adani white elephant won’t even pay Australian tax

By Leith van Onselen Yesterday, it was former Indian environment minister, Jairam Ramesh, and the former head of India’s Ministry of Power, E.A.S Sarma, sounding the alarm on Adani’s track record and the Carmichael coal mega-mine’s viability: “Adani Group’s track record on environmental management within the country [India] leaves a lot to be desired,” Mr Ramesh