Iron ore prices are falling for a 10th straight day and have dropped 8.4% this month to five-year lows on concerns that global supplies are topping demand just as China’s recovery shows signs of faltering.
Iron ore demand seems to be cooling in China, Commerzbank analysts say, adding that the usual seasonal uptick in Chinese demand likely will fail to materialize this year.
Supply in the seaborne market also remains plentiful, where output is expected to exceed demand by 72M tons in 2014 and 175M tons in 2015, and prices will average $106/ton this year and $80 next year, Goldman Sachs estimates.
Global miners are mostly lower following big losses yesterday: SID -2.6%, VALE -1.6%, CLF -1%, RIO -0.2%, BHP +0.2%.
Morgan Stanley (NYSE:MS) is filing plans to build, own and operate one of the first U.S. compressed natural gas export facilities and submitted its application to the Department of Energy in May.
The move is the first sign that the bank is returning to the physical commodity markets even as it sells its global oil business.
Morgan Stanley, along with Goldman, are the only two Wall Street banks that are allowed to own and operate infrastructure of raw materials due to their "grandfather" status for any commodities activities they engaged in before 1997.
McArthur River has the capacity to produce 18M lbs/year of uranium, or ~10% of global demand, according to Bank of Montreal analysts, and was the world’s largest uranium mine by production last year.
Uranium prices are still only about half their levels just before the March 2011 earthquake and tsunami that led to the meltdown of three Japanese reactors and the suspension of the country’s nuclear power plants.
Spot gasoline in the Chicago region was $0.12/gal. above October futures on the Nymex, up from a $0.725 premium yesterday, while ultra low sulfur diesel rose by $0.275 to a $0.03 discount to Nymex futures and jet fuel jumped $0.65 to a $0.14 premium.
The extent of the damage at BP's 105K bbl/day hydrotreater is not immediately clear, analysts are saying.
Concerns about falling iron ore prices are sending global miners and steel companies sharply lower: CLF -5.8%, SID -5.7%, VALE -4.4%, RIO -3.9%, X -3.9%, BHP -2.5%, ANR -2.5%, MT -2.4%.
There’s too much supply of iron ore and prices will continue to fall further, deepening a slump that has hurt profits at the biggest miners, according to the head of Austria’s largest steelmaker.
Iron ore prices fell to their lowest level in five years today to $87.30/ton, the lowest since 2009; Voestalpine CEO Wolfgang Eder sees prices at $90-$100/ton for the rest of 2014 before settling at $80-$90 in the medium term.
Consumption will be sustained at least through this fall as farmers replenish declining nutrient levels in the soil after crop production that reached an all-time high this year, Uralkali says; the region’s H1 demand was ~6M tons, up 30% Y/Y.
Uralkali, competing with Potash Corp. (NYSE:POT), Agrium (NYSE:AGU) and Mosaic (NYSE:MOS), sells ~5% of its output in the U.S.
Syngenta (SYT -0.3%) is open to a deal, whether as an acquirer or as a target, perhaps with Dow Chemical (DOW -1.4%) or DuPont (DD +0.2%), Bloomberg speculates.
SYT and Monsanto (MON -0.5%) held preliminary talks with advisers earlier this year about a combination that never came to fruition, which shows SYT’s willingness to make a deal, analysts say.
One option discussed is a takeover of Dow’s agricultural business, which Dow is open to divesting; SYT also could merge with DuPont and then spin off the U.S. company’s non-agricultural businesses.
Dow may be a better candidate to use a SYT acquisition to relocate overseas for tax advantages, analysts suggest, but with the Obama administration looking at ways to discourage tax-inversion acquisitions, DuPont’s well-known brands and sales to the U.S. military may spark greater political pushback.
Commodity trader and miner Glencore (OTCPK:GLCNF, OTCPK:GLNCY) and Chinese nickel producer Jinchuan Group are the front runners to buy BHP Billiton's (NYSE:BHP) Australian Nickel West division, Reuters reports.
Estimates of Nickel West's value vary greatly, with some analysts and industry sources saying it's worth up to a $1B while others tag negative figures to the asset that they say is burning cash.
DuPont (NYSE:DD) agrees to pay $1.28M to settle alleged violations tied to hazardous chemical leaks at the Belle chemical plant in West Virginia during 2006-10 that left one DuPont worker dead, the U.S. Justice Department and EPA announce.
DuPont also agrees to implement new procedures to improve its response to alarms over hazardous releases, which are expected to cost $2.28M; the company already has spent ~$6.83M to comply with a 2010 order from the EPA over Clean Air Act violations.
Newmont Mining (NYSE:NEM) has withdrawn its arbitration claim against Indonesia's government, which Sterne Agee analyst Michael Dudas should pave the way for a ramp-up for copper production and exports from Batu Hijau and help to remove an overhang for NEM shares.
NEM’s shares underestimate where gold prices may trade, the firm believes; as longer-term plans emerge supportive to margins and returns, NEM’s valuation should regain support based on its assets, commitment to cash flow, and margin and balance sheet strength.
The firm considers Buy-rated NEM its favorite large-cap North American gold equity.
The U.S. will not go ahead with planned import duties on specialized steel from Japan, Germany and Poland after the U.S. International Trade Commission found the imports were not harming local industry.
The U.S.-based public affairs lobby of the Japanese steel industry welcomes the decision, which came after a complaint lodged by AK Steel (AKS -2.9%) and others.
The decision affects companies including Nippon Steel & Sumitomo Metal (OTC:NISTF) and Germany's ThyssenKrupp (OTC:TYEKY, OTCPK:TYEKF), which had been named in the dispute.
Methanex (MEOH -1.7%) says Trinidad's National Gas Co. has advised it to expect higher gas curtailments in the country during H2 than in H1, due to maintenance and tie-in activities “and the ongoing mismatch between upstream commitments to supply NGC and downstream demand from NGC’s customers."
MEOH is operator of two plants in Trinidad, holding respective 100% and 63% interests for a combined proportional share of capacity of ~2M metric tons.
Fortuna Silver Mines (NYSE:FSM) reports estimated measured and indicated resources for its San Jose mine in Mexico rose 42% in contained silver oz. and 29% in contained gold oz. from the July 4, 2013 resource estimate.
H1 production totaled nearly 2.1M oz. silver and ~15.5K oz. gold, 10% and 8% above budget, respectively; production guidance for 2014 is for the processing of 683K metric tons of ore averaging 203 g/t of silver and 1.56 g/t of gold, resulting in output of 4M oz. of silver and 30.4K oz. of gold.
Imperial Metals (OTCPK:IPMLF) says it plans to start up operations at its new Red Chris copper and gold mine once a power line is completed in September.
There have been concerns in the market that Imperial could be forced to delay the Red Chris start-up as it deals with the clean-up of the spill at its Mount Polley mine, which also is in British Columbia.
Imperial also says the Tahltan First Nation will help it review Red Chris' tailings dam to make sure its design, engineering, construction and operations meet world-class standards.
The government had said earlier it would pay the refunds only if the companies produced import certificates, but mining executives argued that producing the import certificates is next to impossible because companies sometimes sell their minerals to middlemen.