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Iron ore prices unlikely to rise soon, top China economic planning group says

  • Iron ore prices are unlikely to rise over the next three months from their current trough, the lowest in nearly two years, China's top economic planning agency says.
  • "The period of China's high steel demand has passed, and iron ore demand is now rising at a slow pace of 3%-4% annually," the agency says.
  • Iron ore prices sank below $100/metric ton this week for the first time since September 2012, down 25% YTD to a low of $97.
  • Iron ore prices depend almost entirely on demand from China, which consumes two thirds of global ore supply and makes nearly half the world's steel.
  • Iron ore miners are broadly lower: CLF -3.6%, RIO -2.5%, BHP -1.2%, VALE -0.7%.
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Comments (12)
  • petergrt
    , contributor
    Comments (482) | Send Message
     
    Can anybody think of a more self-serving comment from a buyer . . . .?

     

    Anyway, the lower price of ore will soon liquidate a bunch of high cost miners.
    28 May 2014, 12:22 PM Reply Like
  • 6151621
    , contributor
    Comments (1180) | Send Message
     
    I'd say supply has been a big factor as new iron ore mines have caused excess supply. Imports to China up 10% yoy: http://reut.rs/SQA6zs
    28 May 2014, 01:01 PM Reply Like
  • sreimer77
    , contributor
    Comments (241) | Send Message
     
    Right on! Vale will be the only miner left standing! India is curbing exports, China is a high cost producer of low quality Iron Ore which leaves Vale as the only miner able to withstand a significant decline in pricing with the exception of RIO and BHP of course. Though, their Iron Ore is not of the same quality. If you look at Iron ore prices for pellets, the highest quality, it is priced at a premium to the underlying benchmark for Iron Ore! I'm a buyer of Vale if it breaks $12.50 as I already have a sizable position. With the dividend already declared for 2nd half FY 14 and a price to cash flow at 4.25 there is no better value stock out their!
    28 May 2014, 01:02 PM Reply Like
  • unilifebeliever
    , contributor
    Comments (57) | Send Message
     
    Bhp produces the lowest cost iron ore in the world at $40 per tonne, so how is "vale the only miner left standing". And I am pretty sure bhp and rio have high grade iron ore aswell
    29 May 2014, 09:09 AM Reply Like
  • unilifebeliever
    , contributor
    Comments (57) | Send Message
     
    Bhp produces the lowest cost iron ore in the world at $40 per tonne, so how is "vale the only miner left standing". And I am pretty sure bhp and rio have high grade iron ore aswell
    29 May 2014, 09:09 AM Reply Like
  • 6151621
    , contributor
    Comments (1180) | Send Message
     
    @unilifebeliever, yeah totally good point. This is why Iron Ore went into oversupply is from all these big projects (it definitely isn't just VALE) the large miners developed recently.
    29 May 2014, 10:02 AM Reply Like
  • petergrt
    , contributor
    Comments (482) | Send Message
     
    Actually, Vale's cost is now about $25 and projected to be about $15/ton as new mines come on line. Shipping adds about $7 - $10/ton.

     

    Further, Vale now does not sell any pallets in China, which will soon change.

     

    Vale sells most of its highest grade ore & pallets to Europe and Korea . . . .
    29 May 2014, 01:43 PM Reply Like
  • unilifebeliever
    , contributor
    Comments (57) | Send Message
     
    Well it's made Australia the largest exporter now because they are pushing so hard to increase production even though they can control the worlds supply and could fix the price basically
    2 Jun 2014, 08:43 AM Reply Like
  • Parker Logan
    , contributor
    Comments (247) | Send Message
     
    How is China going to meet their growth targets without steel?
    28 May 2014, 02:57 PM Reply Like
  • sreimer77
    , contributor
    Comments (241) | Send Message
     
    South Korea is one of the largest consumer of steel! Automobile manufacturing is one of the biggest consumers of steel.. Auto sales have been increasing, haven't they?
    30 May 2014, 09:18 AM Reply Like
  • myztiX
    , contributor
    Comments (47) | Send Message
     
    Unless their intent is to strangle and squeeze the other iron ore producer out of business, but where is the logic behind increasing production for a mine where you have a long life span, to participate in driving iron ore prices down? maybe 'm just stupid to realize this common sense.
    3 Jun 2014, 11:34 PM Reply Like
  • myztiX
    , contributor
    Comments (47) | Send Message
     
    From all the articles I'm reading, they are citing 1.2 B decrease to rio revenue... They are able to weather the storm, but doesn't make sense IMO.
    3 Jun 2014, 11:36 PM Reply Like
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