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Iron Ore, The Iron Ore Industry
mullokintyre
post Posted: Sep 10 2020, 10:15 AM
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Interesting post by Robert Gotliebson in todays OZ

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Australia must brace itself for the next round of the war of words and actions with China an attack on the price of iron ore and the nations key revenue base.

My China contacts tell me that the anger China is currently displaying over issues like Australias call for a COVID-19 inquiry and journalistic disputes is minuscule compared to the fury in China created by the recent jump in the price of iron ore.

Rightly or wrongly, Chinese President Xi Jinping believes that Australia has ruthlessly exploited the COVID-19 pandemic to force China to pay exorbitant prices for iron ore. Xi is determined to teach us a lesson as early as next year, but certainly in the years to come.

Australia has undertaken a massive domestic expenditure program to reduce the economic impact of the pandemic and has been able to fund at least part of that expenditure by the massive tax revenue that is being generated by the high price of iron ore.
If China succeeds in slashing the price of iron ore next year and in the following years, Australia will feel great pain. But so will the shareholders in BHP, Rio Tinto and Fortescue, who have been basking in higher profits and dividends in the wake of the higher iron ore price.

Of course if China is successful in slashing the iron price it will, almost certainly, reduce the value of the Australian dollar which will cushion some of the impact of the lower mining profits when converted to the Australian currency.
Australian extortion

The Chinese belief that the current iron ore price is simply Australian extortion imposed on China is partly frustration over a series of events that coincided to send the price higher than anyone could have expected.

Earlier this year in the midst the early stages of the pandemic, iron ore fell to around $US80 a tonne. At that level, the local Chinese production incurs losses, so production was curtailed.

China was able to contain the effects of COVID-19 more effectively than any other developed nation and to restart its economy it embarked on a major program of infrastructure and property investment, so increasing the demand for steel and iron ore.

Chinas second largest supplier, Brazil, could not respond to the higher demand because its main producer, Vale, became a victim of COVID-19 infection.

In contrast, Australian iron ore mines did not become infected with COVID-19 and lifted output marginally.
The combination of increased demand and restricted output by local Chinese producers, as well as Vale, set the scene for the big price rise to around the $US125-130 mark the highest since 2014 and the largest rise of the major commodities.

To slash the price China is looking to increase local production, which is profitable at prices above dollars $US90 a tonne. And it expects that next year Vale will be able to produce greater tonnages.

At the same time, this latest Chinese round of capital investment is similar to what happened at the end of the Japanese capital investment boom: new capital expenditure was of marginal value and often totally useless. Accordingly, the Chinese expect to decrease their capital spending next year and look to consumers to fill the gap. At the same time, it is likely that exports to the US will decline further in 2021 particularly if Donald Trump wins a second term.

Teaching us a lesson

Then, in Chinas view, Australia will be taught a lesson about not exploiting a pandemic against your main trading partner. But in Australian, eyes we are simply benefiting from a market price increase just as we suffer from market a falls. There is no extortion.

But China will take its plan to lessen dependence on Australian iron ore to a second stage and is encouraging Brazil to open up new mines and new deep water ports to enable the Chinese supercarriers to take Brazilian ore to China at costs that are comparable or lower than to transport from Australia, where smaller ships are used.China hopes that this will further lower the iron ore price and decrease Australias role in the trade. Further down the track China, with the help of London-based Rio Tinto, hopes to open the massive Simandou iron ore mines in Guinea.

I suspect the full force of the lesson China plans to teach Australia will be felt by BHP. The Big Australian played a large role in converting iron ore contracts from fixed price to market price around a decade ago and the largest shareholder in Rio Tinto BHPs major iron ore rival is a Chinese state owned enterprise, Chinalco. It will be fascinating to see the reaction of Chinalco in the Indigenous caves issue that is putting the job of Rio CEO Jean-Sbastien Jacques under pressure from Australian institutions.

China believes that the Australian currency is vulnerable to a big fall in the iron ore price, given its huge deficits and dependence on borrowing. And so a collapse in the iron ore price will inflict significant punishment on the recalcitrant nation down under.

Not sure how much I believe in terms of what China thinks, but I guess we will know soon enough if shipments from WA strt to drop off.
The Macgowan govt then will be looking a little red faced as its major source of revenue starts to drop off, just when it will be going deeper into debt.
The Feds will be in a similar boat, though they are less dependant on iron ore, but have a lot of competing interests for the fed handouts.
Could be interesting.
Mick



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nipper
post Posted: Sep 4 2020, 09:39 AM
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Iron ore price benchmarks firmed overnight, with 62% Fe closing above US$130.80/t, and 58% Fe to US$117.35/mt.

Prices rallied on steel mill restocking ahead of holidays in October, which is expected to support prices through September, and on expectations for accelerating construction and infrastructure activity through September and October, said Commonwealth Bank commodity strategists.

The ANZ strategy team said real estate activity is even stronger than it was before the COVID19 crisis began and that is partly supporting iron ore prices. Housing transactions have picked up strongly on the back of pent-up demand, particularly in China, the ANZ strategists said. This sector consumes about 40 per cent of total steel consumption and it also has important implications for downstream demand. We see iron ore benefiting from this over the next six to nine months.





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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Jul 24 2020, 07:22 PM
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Chinese thirst for Australian iron ore has just registered an all time record of $9.4 billion in a single month, helping to drive a big bounce in overall exports. Preliminary figures from the Australian Bureau of Statistics showed the bounce in exports means Australia is likely to have recorded a 30th successive trade surplus in June.

June exports to China increased by 7 per cent, or about $1 billion, to $14.5 billion. The jump in iron ore exports to China pushed the total exports of iron ore for financial year 2020 to over $100 billion, representing more than a quarter of Australias total goods exported for this period ( and likely to provide a comparatively small but helpful boost to the government's deficit of $85.8 billion.)





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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: May 27 2020, 01:24 PM
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And in Forbes, though the correspondent is familiar and local

https://www-forbes-com.cdn.ampproject.org/v...ron-ore-boom%2F



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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nipper
post Posted: May 27 2020, 10:56 AM
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In Reply To: nipper's post @ May 16 2020, 04:35 PM

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Iron ore shipments from Brazil have fallen by almost a quarter in May because of the country's coronavirus crisis, which is one of the worst in the world, said Macquarie analyst Serafino Capoferri. Brazil exported 15.27 million tonnes of iron ore in the first three weeks of May, he said. That is down from 19.4 million tonnes in the comparable period of 2019, when exports were already lower than normal following the fatal dam collapse at Vale's mine in Brumadinho.


"The situation in Brazil is pretty much out of control," said Mr Capoferri. He said the pandemic had caused difficulties at the country's mines, which are more labour-intensive and require people to work closer together than mines in Australia.


Vale has said the coronavirus will reduce the amount of iron it is able to produce this year. The company said in late April it will mine between 345 million and 370 million tonnes of iron ore powder and pellets in 2020, around 40 million tonnes less that it previously expected. Brazil as a whole mined 480 million tonnes of iron ore in 2019, according to the US Geological Survey, a fifth of global production and second only to Australia

Pilbara companies are the biggest beneficiaries



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: May 16 2020, 04:35 PM
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Iron Ore Rises As Coronavirus Spread Threatens Brazilian Supplies
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Global iron ore prices leapt a surprisingly strong 5% on Friday as doubts re-emerged about the security of Brazilian iron ore supplies in the wake of the continuing spread of COVID-19 across that country. The Metal Bulletin price for 62% Fe fines delivered to northern China jumped $US4.25 a tonne on Friday to end the week at $US88.60. That pushed the price of iron ore up by more than 5.4% for the week.

Traders reported that the rapid spread of the virus to the northern iron ore producing Para state of Brazil triggered concerns late last week. There have been no reports as yet of infections near the iron ore mining areas and port, but concerns are rising.

The Brazilian national and Para state governments have decreed mining, processing, commercialisation, and shipping essential operations, so they will continue if there is a lockdown.

QUOTE
Chinese trade data for April revealed a jump in shipments for last month. Customs data showed that 97.27 million tonnes were imported last month, up from 85.91 million tonnes in March and 80.77 million tonnes a year earlier, when shipments from Brazil’s top miner Vale were disrupted after a tailings dam disaster on January 25.
In fact imports in April of 2019 hit an 18 month low because of the shortfall from Brazil. In the first four months of 2020, China imported 360 million tonnes of iron ore, up 5.8% from 340.21 million tonnes in the same period last year, according to customs.


https://www.sharecafe.com.au/2020/05/11/iro...ilian-supplies/



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 

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nipper
post Posted: Apr 21 2020, 02:14 PM
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In addition to [BHPs] record iron ore production in the Pilbara, production was 7 per cent higher year on year at 60 million tonnes, there was record production at the Caval Ridge coal mine in Queensland and record average concentrator throughput was delivered at Chilean copper mine Escondida.

Full-year guidance remains unchanged for iron ore, metallurgical coal and petroleum, while minor trimming of guidance in other commodities is mainly due to COVID-19 putting the brakes on some operations.

Crucially, full-year cost guidance remains unchanged, suggesting the lower Australian dollar has helped to offset the increased costs associated with running mines and other operations in a socially distanced way.

With production strong and costs contained, the final piece of the puzzle is price – and it’s here where BHP has really good news for investors, and Australia.

One of the surprising features of the COVID-19 crisis is the resilience of iron ore, which has stayed above $US80 a tonne throughout. To put this in perspective, BHP’s full-year cost guidance for iron ore is for unit costs of $US13 to $US14 a tonne – that’s a hell of a margin in anyone’s language.




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Mar 18 2020, 06:43 AM
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Vale, has raised the possibility of curbing or suspending iron ore shipments because of the growing threat of the COVID-19 virus?

Certainly Vale’s surprise warning could very well boost global iron ore prices starting today. Iron ore was the only major globally traded commodity whose price rose in last week’s share, bond and commodity sell-off.

The price for 62% Fe fines delivered to northern China rose 96 cents on Friday to $US91.91 a tonne, according to the Metal Bulletin. That’s up 1.6% from the previous week’s close of $US90.19 a tonne.

Iron ore prices have been held up by supply constraints from brazil due to heavy rain and transport hitches, and from Rio’s lower than expected output from its Pilbara mines because of the damage caused by Cyclone Damien in February.

News that supplies from Brazil might be further constrained is likely to see Chinese steel mills and traders chase iron ore higher this week.

The three big Australian iron ore companies have not issued a statement about the impact of the COVID-19 virus on their mining operations, especially iron ore.
https://www.sharecafe.com.au/2020/03/14/bra...ore-production/

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. .Amid all the carnage from China’s production, investment and retail sales figures yesterday (not to mention the car sales and airline passenger figures last week), one figure stood out – China’s steel production, which indicates the continuing resilience of the sector.

Monday’s data from the National Bureau of Statistics (NBS) showed that while there were sharp falls in output across most industrial sectors in January and February, the production of crude steel actually rose – up by 3.1% year on year.

The NBS said output totalled 154.7 million tonnes in January and February. With the one week shutdown for the Lunar New Year in late January and the impact of the quarantines in February, the figure was a big surprise.

It indicates around 77 million tonnes in each month – but the holidays probably trimmed January’s figure back to closer to 70 million tonnes, meaning there could have been a big rise in February.

Seeing output in December was 84.27 million tonnes without the impact of holidays or the virus, a figure around this level in February could have been possible.

This January and February had one extra day because of the leap year but with crude steel production running around 2.5 million tonnes a day, that doesn’t wipe out the all the rise.

In contrast, the production of cement fell by almost 30% YoY, computers and mobile phones by 31% YoY and 34% YoY respectively and motor vehicles by 46% YoY. ..
https://www.sharecafe.com.au/2020/03/17/ste...-of-china-data/



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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nipper
post Posted: Dec 18 2019, 08:54 PM
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Platts survey of iron ore industry players showed most expected a range of between $US70 and $US80 a tonne (including freight) next year compared to recent spot prices above $US90 a tonne. The spot shipping rate from Western Australia to Qingdao is just over $US8 a tonne.

The survey showed 80 per cent of respondents expect higher imports by China's steel mills.

Longer term concerns about "peak steel" have been downplayed by HSBC chief economist Paul Bloxham, who highlights that China has defied forecasts – so far – for a peak in output.

Even assuming China's steel intensity pulls back over the next decade, growing demand from India, Indonesia, Brazil and the infrastructure-heavy focus of China's Belt and Road initiative mean peak steel is unlikely before 2030...




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
blacksheep
post Posted: Dec 5 2019, 10:22 AM
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Buying iron ore is getting more like shopping on Amazon
Bloomberg News | December 4, 201
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The world’s biggest iron ore miners are looking for novel ways of satisfying their customers and protecting market share in the $150 billion global industry.

From selling through a mobile app to portside sales, the likes of BHP Group, Rio Tinto Group and Vale SA are looking for an edge with buyers of the steelmaking raw material in China, the top customer. The need to retain their business is becoming ever more critical amid forecasts that the market is around its peak.


READ MORE - https://www.mining.com/web/buying-iron-ore-...ping-on-amazon/



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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
 


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