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Iron Ore

Iron Ore Sinks as ‘Peak Steel’ Call, Supply Angst Rattle Market – by Jasmine Ng (Bloomberg News – September 20, 2017)

https://www.bloomberg.com/

Iron ore has been dragged back into the $60s after getting hit by a barrage of bad news, with persistent concern about rising global supply, fresh questions about the outlook for demand in China, and a warning from Australia’s central bank that the top buyer may be nearing peak steel.

The benchmark spot price for ore delivered to Qingdao slumped 10 percent in the past four days, ending at $68.85 a dry metric ton on Tuesday, the lowest since July, according to Metal Bulletin Ltd. The sell-off in the commodity, which hit almost $80 in August, took a breather on Wednesday as prices rebounded but remained below the $70 threshold.

“As we get into the fourth quarter, we see demand in China pulling back, demand for steel pulling back,” Paul Butterworth, research manager for steel raw materials at CRU International Ltd., said in an interview in Singapore. “It’s quite likely the steel mills will say ‘well, we’ve got sufficient material on hand at the moment, so we can withdraw from the market for now’.”

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Iron ore price sheds 3.5pc to dip below $US70 – by Samantha Woodhill (The Australian – September 20, 2017)

http://www.theaustralian.com.au/

Iron ore spot prices have fallen below $US$70 a tonne for the first time since July, shedding 3.5 per cent overnight. The spot price was today at $US68.30 a tonne, with futures also indicating weak prices.

ANZ senior commodities analyst Daniel Hynes said the fall followed comments by the Reserve Bank of Australia in its September meeting, the minutes of which were released yesterday.

“The weaker sentiment in the market was fuelled by comments from the RBA, which said prices are expected to fall ahead of the ongoing expansion of the global iron ore supply chain,” he said.

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Brazilian mining giant Vale gears up for ‘in-house’ diversification, possible acquisitions (Platts.com – September 6, 2017)

http://blogs.platts.com/

Speculation has mounted in recent weeks on possible plans by Brazilian mining company Vale’s new CEO Fabio Schvartsman to diversify and make new acquisitions. New strategic partnerships are in theory ruled out because Vale is big enough “to set its own, even more ambitious goals,” according to the new CEO.

New developments may be known on October 18, the date of Vale’s next general shareholders’ assembly, when a “diagnostic report” on the company’s activities, called for by the new CEO, may be considered by board members.

Indications are that Schvartsman — CEO of a paper and pulp concern before he took over the helm of the Brazilian mining giant in May — is concerned over Vale’s dependence on standard iron ore products, the company’s mainstay.

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[Sweden Iron-Ore Mining] How to Move a Town (Bloomberg News – September 5, 2017)

https://www.bloomberg.com/

The citizens of Kiruna, Sweden, always knew they’d have to move to accommodate the local iron-ore mine. They just didn’t expect it to happen so soon, or so all at once.

Appropriately, it was the dog musher who broke trail. Sune Stralberg, 66, is a national champion musher, a maker of dogsleds, and owner of Bjorkis Hundprodukter, a one-stop shop for organic kibble, spare sled parts, and dog leads and harnesses.

All of this makes him a local celebrity in his hometown of Kiruna, Sweden’s northernmost city. He has the white beard and jovial affect of a skinny Swedish Santa and speaks in lovely, lilting sentences, even when he’s recounting painful memories, such as one from three years ago, when he was forced to move his shop out of its longtime home and into a strip mall 2 miles down the road.

He had little choice—the ground beneath the old shop was on the verge of collapse, like much of the rest of the town. “I already knew that I would move because of the iron,” Stralberg says with a shrug. “Everyone knew.”

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Iron Ore’s Kings Are Spending Again – by Rebecca Keenan and David Stringer (Bloomberg News – August 29, 2017)

https://www.bloomberg.com/

The biggest iron ore producers in Australia are spending as much as $10 billion on mines so they can keep pumping out shipments to China as demand in their biggest customer shows little sign of easing.

Led by Rio Tinto Group, the nation’s top three exporters plan to add about 170 million metric tons of new capacity to replace exhausted mines and are studying investments in infrastructure and equipment to boost export capacity to their long-term targeted rates. Output will rise 9 percent to 843 million tons in 2022, according to Deutsche Bank AG estimates.

Forecasts of a slowdown in China’s steel industry are proving to be misplaced with BHP Billiton Ltd. saying production hasn’t yet peaked and likely won’t do so until the middle of next decade, while steel-making raw materials will continue performing well over the coming 12 months. Iron ore prices are trading near a four-month high.

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FMG profits surge, Andrew Forrest books $445m in dividends as iron ore bounces back – by Graeme Powell (Australian Broadcasting Corportation – August 20, 2017)

http://www.abc.net.au/

Mining entrepreneur Andrew ‘Twiggy’ Forrest has pocketed a $445 million dividend cheque after his company Fortescue Metals Group posted a more than 100 per cent net profit jump on the back of stronger than expected iron ore prices.

Australia’s third-largest iron ore producer released its full year figures to the market this morning and reported a net profit of $US2.1 billion ($2.6 billion) — up 112 per cent on last year. The Perth-based company also reported a 19 per cent rise in revenue after shipping 170 million tonnes of iron ore for the year.

Fortescue chief executive Nev Power said the strong results reflected higher iron ore prices and a relentless drive to lower production costs.

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As Good as It Gets: Iron Ore Risks a Reversal as China Cools – by Jasmine Ng (Bloomberg News – August 15, 2017)

https://www.bloomberg.com/

Iron ore in the $70s a ton may be as good as it gets for some time. After rallying hard in June and July, the commodity may see its gains unravel over the second half as steel production in China eases back from a record pace just as global miners pump up volumes.

The robust demand that’s supported gains may fade as steelmakers start to dial back output, according to Capital Economics Ltd., which came out first among forecasters in the second quarter, according to data compiled by Bloomberg. Others expecting a drop include Citigroup Inc., Sucden Financial Ltd., Axiom Capital Management Inc. and hedge fund Academia Capital.

“There was some fundamental support for iron ore’s rally, namely strong growth in China’s steel output,” Caroline Bain, chief commodities economist at Capital Economics, said by email. “Stocks at China’s ports are now stubbornly high and if, as seems likely, steel production and demand eases back later in the year, then we see iron ore prices coming under renewed pressure.”

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Price of iron ore, crude oil and other commodities to take a hit if North Korea crisis escalates: Citibank – by Sunny Freeman (Financial Post – August 11, 2017)

http://business.financialpost.com/

As nuclear rhetoric between North Korea and the United States heats up, Citibank analysts are anxiously watching commodity prices due to the importance of the North Asian market.

Global commodity markets have so far not priced in geopolitical risks even as North Korea threatened to launch ballistic missiles into waters near the American territory of Guam. President Donald Trump warned there would be “fire and fury” against the North if it continued to threaten the U.S.

The VIX, a measure of how much volatility investors expect in stocks, jumped 25.2 per cent, the biggest increase since May on Thursday. The price of gold, considered a safe haven investment, rose more that $12 to US$1,285.40 an ounce by midday against the backdrop of heightened political uncertainty.

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RPT-COLUMN-Port stocks the growing elephant in the room for iron ore prices – by Andy Home (Reuters U.S. – August 7, 2017)

https://www.reuters.com/

LONDON, Aug 7 (Reuters) – Chinese steel and iron ore prices continue to rise in lock-step. In Shanghai today the most active steel rebar contract went limit-up, surging 7 percent to 4,013 yuan per ($597) per tonne, its highest level since April 2013. Where Shanghai steel leads, Dalian iron ore follows.

The most-traded contract on the Dalian Commodity Exchange jumped as much as 7.3 percent to 587.50 yuan per tonne at one stage, its highest level since March 21. And where Dalian leads, the rest of the iron ore world follows. On the Singapore Exchange the cash contract has just punched up through the $77-per tonne level, also for the first time since March.

There is much speculative froth in this mix. Market open interest on both Shanghai steel and Dalian iron ore hit record highs last month and is still at historically elevated levels. However, this is not just irrational exuberance.

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RPT-COLUMN-Iron ore may eventually have to leave China’s steel party – by Clyde Russell (Reuters U.S. – August 1, 2017)

http://www.reuters.com/

LAUNCESTON, Australia, Aug 1 (Reuters) – China’s surging steel sector is pulling iron ore along for the ride, but the strong gain in prices raises the risk that marginal supply of the raw material will start to flow into what is already a well-supplied market.

Steel prices in Shanghai received another boost on Monday on the back of an increase in China’s Purchasing Managers’ Index (PMI) for the sector, which climbed to 54.9 in July from 54.1 in June, marking the third consecutive month that the indicator was above the 50-level that demarcates expansion from contraction.

The steel PMI was also at its highest in 14 months, which helped boost benchmark Shanghai steel rebar futures to a close of 3,663 yuan ($545) a tonne, taking the year-to-date increase to almost 38 percent.

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Rio Tinto doubles first-half profit, offers record dividend – by James Regan and Barbara Lewis (Reuters U.K. – August 2, 2017)

http://uk.reuters.com/

SYDNEY/LONDON (Reuters) – Global miner Rio Tinto more than doubled its first-half profit buoyed by Chinese iron ore demand and rewarded shareholders with a record interim dividend and $1 billion in share buybacks.

Underlying earnings for the six months to June 30 of $3.94 billion missed forecasts for $4.19 billion, according to Thomson Reuters I/B/E/S, but were well above last year’s $1.56 billion following a recovery in iron ore and other commodity prices.

Rio Tinto declared a record-high half-year dividend of $1.10 a share, equivalent to $2 billion, up from 45 cents a share a year ago. The latest buyback comes on top of a $500 million program announced in February.

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Nunavut economy to grow 6.4 per cent in 2017: study – by Beth Brown (Nunatsiaq News – August 2, 2017)

http://www.nunatsiaqonline.ca/

New mines expected to generate new wealth in the future

Nunavut’s economy will grow by 6.4 per cent in 2017—due to mining and construction. With four mines expected to reach operation by 2020, the Conference Board of Canada forecasts a steady expansion in Nunavut’s gross domestic product, or GDP, which has been rebounding since a drop in 2014.

“Metal mining is the single largest contributor to economic growth, and all operating mines are planning increases in production,” said an Aug. 1 report from the conference board on all three territorial economies. This year, mining output will grow by 23.7 per cent, following the opening of TMAC Resources Inc.’s Doris North mine in the Kitikmeot and increased production at Baffinland Iron Mines Corp.‘s’s Mary River mine and Agnico Eagle Ltd.’s Meadowbank.

That output will increase by 27 per cent by 2019 when Agnico Eagle brings its Meliadine and Amaruq projects into production, the biannual report said. Since dwindling reserves at Agnico Eagle’s Meadowbank site mean operations there will soon wind down, the territory should see a 0.2 per cent decline in total GDP in 2018, said the report.

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Minnesota Grand Rapids ore will make pig iron in Ohio – by John Myers (Duluth News Tribune – August 1, 2017)

http://www.duluthnewstribune.com/

Iron ore concentrate from Minnesota will go to make pig iron in Lorain, Ohio under a deal reached between fledgling ERP Iron Ore and Republic Steel.

Under the agreement ERP will produce concentrated ore at its recently acquired Magnetation operations outside Grand Rapids, move it by rail to its Reynolds, Ind. plant to be baked into pellets and then ship those pellets to Ohio to be made into pig iron.

The two companies will be joint owners of the new pig-iron plant to be built on the site of a now-shuttered Republic blast furnace mill.

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U.S. Rep. Tom Emmer: Why I’m pushing to preserve mining in northern Minnesota – by Tom Emmer (Minneapolis Star Tribune – August 1, 2017)

http://www.startribune.com/

Tom Emmer, a Republican, represents Minnesota’s Sixth District in the U.S. House.

Minnesota is an amazing state with an abundance of natural resources and one of the best-educated and -motivated workforces in the world. We Minnesotans not only work hard, we play hard. In the Land of 10,000 Lakes, we make the most of everything our state has to offer.

For many Minnesotans, mining has been a way of life since the early 1800s. Although the way we mine has changed dramatically over the years, mining is even more important today to the future of our state and our country.  In fact, one of the largest precious-metals deposits in the world has been discovered in Minnesota. This is why it is imperative that we preserve and celebrate mining in our state, not eliminate its future. Unfortunately, this wasn’t always a shared priority with the Obama administration.

When the Superior National Forest was established in 1909 — and later when the Boundary Waters Canoe Area Wilderness was established in 1978 — there was an express agreement between the federal government and the state of Minnesota that certain activities like mining and logging could continue in the Superior National Forest.

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Goldman turns bullish on iron ore – for the moment – by Jasmine Ng (Australian Financial Review/Bloomberg – July 28, 2017)

http://www.afr.com/

Goldman Sachs boosted its iron ore forecasts after better-than-expected demand in China raised prices, but warned that it remains bearish on next year amid prospects for plentiful mine supplies and a worldwide glut.

The three-month forecast was raised to $US70 a tonne from $US55, and the year-end target increased by $US5 to $US60, according to a report from analysts including Yubin Fu and Max Layton received on Thursday. Next year, prices are still expected to drop, it said.

Iron ore has surged in recent weeks to top $US70 a tonne on sustained demand from China, the largest user. Steel mills in the country have benefited from rising product prices and strong profit margins after the government shuttered some capacity, and remaining producers are making record volumes.

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