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Iron Ore

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One report does not make a change but interesting nonetheless.

There's probably another report out there somewhere countering it...:confused:

China fixes vessels for India ore
November 25, 2008

CHINA has chartered 17 vessels to import nearly one million tonnes of Indian ore since November 17, Imarex has noted.

“China could be showing they have more iron ore and steel demand than most currently believe,” Norwegian-based Imarex, the world's largest shipping derivatives trader, said in its report.

“Or, they could just be building up stocks to ensure 2009 contract prices are secured at a hefty discount (Chinese port stockpiles fell 1.3 million tonnes last week to 68.8 million tonsne)."

The Imarex report is consistent with a Macquarie report, which said smaller Chinese steel mills were buying iron ore on the spot market.

“The fall in spot raw material prices has been faster than the fall in steel prices recently, and the enhanced margin has induced some smaller mills to reopen," Macquarie said.

The Macquarie report added that smaller Chinese steel mills were not obliged to pay contracted prices like their larger peers, so can use the spot market to buy inputs and produce steel profitably.

Dow Jones Newswires
 
There is always some silver line which shows better when there is all cloud.
The price of shipping carriage has gone down 'ridiculously' low. The daily rates have become now weekly rate. I was talking with a shipping industrialist couple of days and he is worried about his company's future. He is not the only one however :(

The good point is the price of seaborne materials will be cheaper making Chinese and Indian steel makers to get dirt cheap iron dirt : low freight cost, negotiated lower spot price from smaller suppliers.

The underlining meaning will be that Australian Iron Ore will loose the competitve advantage in terms of cost of sea borne materials against Brazil.

Are BHP and RIO watching the signal considering they were too greedy to screw down the Chinese Steel makers to hike the iron ore price includng equalisation of freight cost ?

Chinese Masters will probably take their revenge now :banghead:
 
Hi Miner, I have checked the Gladstone Port, QLD and 17 ships are due December and have no cargo as yet. It looks as if customers have asked for delays.
 
May be some glimmers of hope appearing. A few stories of late indicating that China's steel industry is starting to move again. A lot of reading between the lines required but as the inventory corrections move back through the supply chain we are finally starting to see some improvement at the dockside. Also been reading stories indicating shipping charter prices moving slightly north again - not really showing through on BDI yet but a recovery is built on many little steps such as these...

IRON ore stockpiles at China's 19 major ports have fallen 15 percent from a record in November after steel makers and traders stopped buying expensive imports, according to an analyst at Umetal Research Center.
Click to expand...
Cash prices of iron ore imported by China rose 3.3 percent this month after gaining 13 percent in November, according to Beijing Antaike Information Development Co. Still, they are down 58 percent this year. China buys most of its spot iron ore from India.

Nanjing Iron & Steel United Co said steel prices have bottomed out and production would recover this month after four months of declines.

Steel makers in China's Tangshan restarted about 40 percent of their idled capacity last month. Tangshan is a city in China's northern province of Hebei, the nation's largest steel-making province with hundreds of small mills.
Click to expand...
http://www.shanghaidaily.com/sp/article/2008/200812/20081225/article_385766.htm

The Shanghai Securities News reported on Tuesday that several mills including Angang Steel Co, Beijing Shougang Co and the private-sector Shagang Group had raised prices for January. Angang raised prices for cold-rolled products by 230 yuan a ton, it said.
Click to expand...

http://www.shanghaidaily.com/article/?id=385765&type=Business
 
China turns screws on iron ore giants
By Felicity Williams
The Daily Telegraph
January 02, 2009 03:46am

http://www.news.com.au/business/story/0,27753,24864541-462,00.html

JUST days into the new year the signs from China for our battered big miners are ominous.

According to reports out of Shanghai, the Chinese Government is seeking tighter control over iron ore imports to help drive down prices for the steel-making ingredient.

That's bad news for the world's biggest iron ore producers - Rio Tinto, BHP Billiton and Brazil's Vale - as it will give Chinese steel giant Baosteel much greater muscle in the current round of iron ore price talks.

Substantially reduced iron ore prices will put even more pressure on BHP and Rio, as they grapple with dramatic price falls across all major commodities.

Rio is especially vulnerable as it struggles with $US38.9 billion ($A55.3 billion) in debts in the face of the global financial crisis.

Annual iron ore contract price negotiations are shrouded in mystery but are believed to have kicked off in the weeks before Christmas.

Beijing reportedly wants closer monitoring of where iron ore shipments end up after their arrival in China's ports.


And it is looking at clamping down on the practice among import agents of making profits by stockpiling iron ore as a punt on future higher prices.

The new regulatory regime could hurt BHP and Rio as it will potentially reduce shipments of iron ore - Australia's second-biggest commodity export after coking coal - into China.

Iron ore demand has already softened dramatically in recent months as the global economic slowdown pulls in steel-intensive industries such as construction activity and car-makers. Global construction of crude steel experienced one of its biggest reversals in November, tumbling nearly 20 per cent to just 59 million tonnes when compared with the same month of the previous year.

In another bad omen China's first batch of coking coal imports for 2009 are nearly half the levels they were a year ago. China's Ministry of Commerce has decided on an initial quota of 5.78 million tonnes - down from 9.62 million tonnes at the start of last year.

That suggests Australia's biggest trading partner is shifting to greater use of domestically produced coking coal rather than imported product as economic times get tougher.

And it could not come at a worse time for coal producers already starting to suffer after a sharp drop in prices for the energy source.

Queensland's Macarthur Coal last month slashed its profit guidance, suspended dividends and laid off workers after chairman Keith de Lacy warned shareholders that it was impossible to predict when coal prices would improve.
 
chansw said:
Rio is especially vulnerable as it struggles with $US38.9 billion ($A55.3 billion) in debts in the face of the global financial crisis.
Click to expand...

Rio's share price is down to 24% of its yearly high but BHP is down to 55% of its high. Why?

Rio has 55 billion in Debts! The market cap is currently 17 billion. Their assets at a quick glance:
-(2006) 27 billion assets and owed 9 billion.
-(2007) 79 billion assets and owed 55 billion.
http://www.riotinto.com/documents/ReportsPublications/2007_Summary_financial_statements.pdf

2007 was a very big year...... crazy!!!!! During the heat of the market!
How the hell do these directors let these companies get into so much debt?

Of the 79 billion in assets, 45 billion was property / plant / machinery. Goodwill was 15 billion. Both valued at 2007 prices (boom time)
What price do you put on it now? Oh dear! not $38.06 ? ummm

----------------------

Got side tracked.
Wanted to post some iron ore companies and their price as a percentage of their yearly highs.
Did the calc's so why not post.

Admiralty trading is at 7% of its high (high $0.35) (Friday $0.025)
Atlas is at 27% of its yearly high
Australiasian is 20%
BC Iron 17%
Brockman 27%
Fortescue 13%
Gindalbie 27%
Grange 16%
Iron ore 19%
Mt Gibson 10%
Murchison 10%
Sphere 9%
Strike 11%
Sundance 19%
territory 10%
Western Plains 12%

Andrew Forest's Fortescue is what?.. just 13% of its high! Remember the hype behind Fortescue and our richest man!
Alot of hurting above....
So many would have caught the knife on the way down as well....
Very hard not to!
 
I dont think that is correct ???? FMG 13% of high..
they did a 10 for 1 share split ast around $100 -130+ bringing it down to $13 and is now around $2 ??? ummm correct me if I am wrong ..




MR. said:
Rio's share price is down to 24% of its yearly high but BHP is down to 55% of its high. Why?

Rio has 55 billion in Debts! The market cap is currently 17 billion. Their assets at a quick glance:
-(2006) 27 billion assets and owed 9 billion.
-(2007) 79 billion assets and owed 55 billion.
http://www.riotinto.com/documents/ReportsPublications/2007_Summary_financial_statements.pdf

2007 was a very big year...... crazy!!!!! During the heat of the market!
How the hell do these directors let these companies get into so much debt?

Of the 79 billion in assets, 45 billion was property / plant / machinery. Goodwill was 15 billion. Both valued at 2007 prices (boom time)
What price do you put on it now? Oh dear! not $38.06 ? ummm

----------------------

Got side tracked.
Wanted to post some iron ore companies and their price as a percentage of their yearly highs.
Did the calc's so why not post.

Admiralty trading is at 7% of its high (high $0.35) (Friday $0.025)
Atlas is at 27% of its yearly high
Australiasian is 20%
BC Iron 17%
Brockman 27%
Fortescue 13%
Gindalbie 27%
Grange 16%
Iron ore 19%
Mt Gibson 10%
Murchison 10%
Sphere 9%
Strike 11%
Sundance 19%
territory 10%
Western Plains 12%

Andrew Forest's Fortescue is what?.. just 13% of its high! Remember the hype behind Fortescue and our richest man!
Alot of hurting above....
So many would have caught the knife on the way down as well....
Very hard not to!
Click to expand...
 
adobee said:
I dont think that is correct ???? FMG 13% of high..
they did a 10 for 1 share split ast around $100 -130+ bringing it down to $13 and is now around $2 ??? ummm correct me if I am wrong ..
Click to expand...

Don't "your" figures add up similar to mine? What are you getting at? Before the split lets say it was your $130- and Friday it was $1.745 you can't say FMG is down to just 1.3% of its high!..... That would be a little silly!
Hope you're not just tring to be smart here!

Perhaps you are thinking "FMG is 13% off its high" but I wrote it is 13% of its high!

Don't know what point you are attempting to make?
 
MR. said:
Don't "your" figures add up similar to mine? What are you getting at? Before the split lets say it was your $130- and Friday it was $1.745 you can't say FMG is down to just 1.3% of its high!..... That would be a little silly!
Hope you're not just tring to be smart here!

Perhaps you are thinking "FMG is 13% off its high" but I wrote it is 13% of its high!

Don't know what point you are attempting to make?
Click to expand...

My mistake you did clearly say 'of' its high and i took it as 'off' its high...
my sincere appologies..
 
What is the expectations of the new benchmark price ??
Considering a large drop in the price is this already factored into the market ? How bad does the market expect the price drop to be ?

Peoples thoughts please... thanks
 
In the coming months there must be a rebound or floor for iron ore and non ferrous metals in the world market.

The fiscal stimulus in the Chinese economy is already starting to take shape with large contracts being won by international companies to provide infrustructure. :)

$1b Trains contracts! Buildings etc!! Record Lending in China will lead to increased demand for Australian Minerals!!! Please read article below!


BOC: Lending is determined by market(China Daily)
Updated: 2009-03-17 07:58 Comments(3) PrintMailDomestic banks are guided by market conditions and prudence - and not government diktat - when issuing new loans, the chairman of Bank of China has asserted.

No political leader has told his bank to lend as part of the central government's stimulus package to cope with the economic crisis, Xiao Gang told China Daily.

The situation is the same with other commercial banks and has been so for many years, he said.

Related readings:
Wen: More stimulus push if needed New lending may exceed 5 trillion yuan in 2009
China's stimulus package plan not fully understood
Stimulus plan draws concerns over corruption
Top legislature to improve supervision over stimulus plan



Chinese banks are expected to grant some 5 trillion yuan ($732 billion) in new loans this year, Premier Wen Jiabao told the annual session of the top legislature in Beijing last week.

Last year, new yuan loans amounted to 4.9 trillion yuan.

But banks are increasing their lending portfolio not because they are told to do so by the government, but because government-approved development projects are potentially the most lucrative, Xiao said.

Contrary to speculation that political pressure is behind the dramatic rise in drastic lending growth (1.62 trillion yuan of new loans in January alone, up 101 percent year on year), "the pressure is only from the market - in the form of competition from other banks and the expectations of ever-improving performance from our shareholders," said the boss of one of the four largest State-owned banking corporations in China.

Since the restructuring of the banking industry in 2003-04, many State-owned banks have become publicly-listed companies.

Right now, the lenders' game is to get a larger share of Beijing's 4-trillion yuan ($586 billion) economic stimulus package because they have little to worry about its implementation process, Xiao said. Most of the new loans issued in recent months have gone to the infrastructure projects in the stimulus package, he added.


Low interest rates are also a factor driving the banks to compete for more profitable lending projects, Xiao said. The central bank slashed lending and deposit rates by 1.08 percentage points in November, the largest reduction in more than a decade.

So whenever a good project is identified, "we have to try to lend early and lend a lot," Xiao said,

Xiao admitted that such rapid lending growth could lead to an increase in non-performing loans. "There is a possibility. That's also why we always have to be careful."

But Chinese banks are better equipped to handle bad loans than they were five years ago, thanks to stricter banking regulations, he said.

Xiao also said BOC is working on overseas expansion although it will remain "very cautious" with mergers and acquisitions.

BOC has more than 800 branches or outlets in 29 countries and regions; and this year marks the 80th anniversary of its first overseas branch in London.

Overseas, "BOC will concentrate on supporting Chinese companies' expansion," Xiao said. But since it takes a long time to set up branches abroad, BOC will seek to tie up with foreign financial institutions in those countries.

According to the company's statement, BOC has provided $26.9 billion in loans and services to more than 80 Chinese companies, including Sinopec, China National Petroleum Corp and China Mobile, in more than 60 countries.


Which means prices of minerals is expected to rise soon! They wont reach the hefty prices of 2008, but expect them to reach 2007 prices! With Australian Dollar hovering around 63-68c/US then this means quite a reasonable revenue going into 2H2009!
Bluechip Materials as well as a few quality speccies are the GO for Q2 2009! Good Luck!
 
123happy said:
I'm also interested in small iron ore miners, as friend of mine is seeking to buy iron ore for a Chinese steel mill.

CFE, RHI, SDL and TRF are some of the junior iron ore players on my screen
Click to expand...

I believe that I can connect you with a supplier of iron ore for your friend.

Please let me know if you need my assistance.
 
Price talks for iron ore riddled with mistrust
John Garnaut in Qingdao,China
April 28, 2009

A CHINESE benchmark price for iron ore may not be set at all this year because Chinese mills cannot be trusted to honour their contracts, say mining executives involved in negotiations.

All three large Australian iron ore mining companies are reluctant to agree to any benchmark contract deal, regardless of the price, because of concerns the contracts will not hold if spot prices fall further, according to sources close to each company.

"If we set the benchmark at the spot price and the spot price goes higher, then they honour the contract and we lose," said an Australian executive involved in price negotiations. "And if the spot price keeps falling, then they ignore the contract and we still lose," he said.

An executive at another Australian iron ore major said "they effectively get a call option".

Negotiations have been sporadic this year, despite the new contracts being supposed to begin from April 1.

Since early March there have been virtually no ore shipments to China at the current benchmark price because Chinese buyers have walked away from their contracts in order to buy at or close to the domestic spot price, about two-thirds of the benchmark price, according to Australian miners and Chinese buyers.

Chinese mills say a precedent for abandoning contracts was set by Rio Tinto and Vale last year - the former shifted a proportion of iron ore exports from contract to spot sales and the latter tried and failed to achieve a mid-contract price rise.

While Australian miners have recently lost money from lower prices, they see benefits in shifting to a spot market or "index" price because it is calculated on a landed basis and therefore removes the freight subsidy that was previously given to Brazilian producers.

Brazil's Vale prefers the benchmark price system, for the same reason, but has said it will not set the benchmark price this year because Australian miners could ignore it, as they did last year.

The big entry this year into the Chinese spot market by the global miners has also given them an unprecedented reach into the smaller and mid-sized mills and trading companies that previously relied on ore mined in China.

Traders and shipping agents expect the iron ore spot price to keep falling as China is inundated by shipments the rest of the world no longer needs.

Huangdao Port is occupied by vast mountains of Australian and Brazilian iron ore that has been bought by Chinese mills and traders and is waiting to be carted to mills inland.

Port authorities are struggling to cope. "There are eight ships waiting at Huangdao now, 11 down at Rizhao, because we are running at capacity and can't unload," said Zhang Zaichun, general manager of the Qingdao Port Authority, which controls Huangdao and nearby Rizhao, two of the world's largest iron ore ports.

Huangdao handles 82 million tonnes of iron ore a year and Rizhao slightly more. But port authorities are nevertheless building a third huge iron ore port in between, to handle 400,000 tonne vessels from Brazil.

"The volume has slowed down because of the port stockpiles. Everybody fears prices will go down and down," said Li Long, a Sinosteel representative in Qingdao.


Full Story Here
 
rio tinto has announced a 2009 iron ore price settlement with japanese steel co nippon

the hammersley contract price settlement has in the past become the default annual contract price

awaiting chinese and bhp and vale response

...

Under this agreement, the new prices for Hamersley products will be:

Pilbara Blend Fines US cents 97 per dry metric tonne unit (approx 32% down from last year)

Yandicoogina Fines US cents 97 per dry metric tonne unit (approx 32% down from last year)

Pilbara Blend Lump US cents 112 per dry metric tonne unit (approx 44% down from last year)

...
Click to expand...
cheers :)
 
July China iron ore imports at highest monthly volume on record
http://www.bloomberg.com/apps/news?pid=20601012&sid=aJwN01TEImHg

Chinese steel demand appears to be making a solid recovery with iron ore imports at a new record. Steel exports are rising but still well below a year ago.

Posted: Tuesday , 11 Aug 2009

BEIJING (Reuters) -


China imported 58.08 million tonnes of iron ore in July, the highest monthly volume on record and up 31.8% from the same period last year, the country's customs authority said on Tuesday.

Steel product exports reached 1.81 million tonnes, 25% higher than June but down 67.3% compared with July last year.

In June, iron ore imports were 55.3 million tonnes and exports of steel products were at 1.43 million tonnes. Analysts said Chinese steel demand was making a solid recovery, and an increase in domestic ore output has not been enough to meet the needs of the market.

"Total demand has increased and China has got to import to fill the incremental demand growth," said Henry Liu of Macquarie Bank in Shanghai.

But despite signs that overseas markets are also improving, the China Iron and Steel Association still insists imports are far higher than necessary.

Irrational expansion plans by small local mills and speculative behaviour by traders had boosted the import volume to unrealistic levels and pushed spot ore prices beyond what the market can bear, CISA Secretary-General Shan Shanghua said at an association meeting in Beijing last month.

CISA has attempted to cajole traders and small mills into cutting iron ore imports, in a bid to bolster its position during protracted contract price talks with foreign miners Rio Tinto (RIO.AX: Quote)(RIO.L: Quote), BHP Billiton (BHP.AX: Quote) and Vale (VALE5.SA: Quote).

CISA figures show trading companies were responsible for 44% of all iron ore imports in the first half of 2009, up from 30% last year.

CISA is urging the government to revoke import licences in order to better control the volumes of overseas iron ore coming into the country.

(Reporting by David Stanway, Editing by Clarence Fernandez and Jacqueline Wong)

© Thomson Reuters 2009. All rights reserved.
 
The Iron Ore Futures Collapse Chart That Everyone Is Talking About It

iron ore.jpg

Joe Weisenthal|Aug. 22, 2012, 8:39 AM


Read more: http://www.businessinsider.com/iron-ore-futures-2012-8#ixzz24HZjiUDQ

excerpt
Included with the chart he sent this nice, quick overview:

Iron ore is second biggest commodity traded internationally by volume (after oil). It is the main ingredient in the production of steel. China is by far the worlds #1 producer of steel and importer of iron ore (over 60% of seaborne ore goes to China).

While Wall Street focuses on Oil, Natural Gas, Copper etc., Iron ore is a huge commodity that is highly reliant on Chinese demand. While most other commodities are recovering from their lows Iron Ore is crashing. The spot peaked this year at around $150/ton in April (highs close to 190 last year). The spot now is around $105 per ton and falling fast and the futures (now fairly liquid and traded internationally) are pricing q4 below $95/ton.
Click to expand...
 
Good stuff.

John Hempton from Bronte Capital recently wrote a post discussing how marginal producers would not be able to withstand lower prices in ore for very long but that companies like BHP and RIO are making serious bread at almost any iron ore price.
 

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