Iron Ore - General Commentary

[divs4ever]

Iron ore: No glitter, but golden profits​

Iron ore: No glitter, but golden profits

Callum Newman at Fat Tail Investment Research explains why iron ore is the commodity to back right now, not oil.

www.livewiremarkets.com

i hold GRR ( 'free-carried' ) MGX and FEX

also BHP and WDS

 

[mullokintyre]

iron ore has hit a 10 month high on expectations that China will get going on the stimulus bandwagon.
From Zero hedge


Mick

 

[finicky]

BHP hit a 12 month high today. Don't know about the others: FMG, RIO

 

[rcw1]

BHP hit a 12 month high today. Don't know about the others: FMG, RIO

Good afternoon finicky
yeah reckon all 3 all time highs ... well done to holders

Have a very nice day today ..

kind regards
rcw1

 

[mullokintyre]

I was reading the report from a link posted in the China Bull forum about Australia's dependance on Iron ore sales to China.
As can be seen, about 70% of our Iron ore sales go to China.
Should China really contract as so many think it will, it is going to have a devastating effect here in OZ.
it will also have a devastating effect in the Iron Ore Miners.
Mick

 

[TimeISmoney]

I was reading the report from a link posted in the China Bull forum about Australia's dependance on Iron ore sales to China.
As can be seen, about 70% of our Iron ore sales go to China.
Should China really contract as so many think it will, it is going to have a devastating effect here in OZ.
it will also have a devastating effect in the Iron Ore Miners.
Mick
View attachment 171301

I was going to bring this up before but see all the problems China is currently having with locking hedge funds down?

Quant Hedge Funds Face China Clampdown After Rare Account Freeze​

China’s two main stock exchanges vowed to tighten supervision of quantitative trading after freezing the accounts of a major fund for three days in an unusually harsh punishment.

The Shanghai and Shenzhen bourses will enhance monitoring of quant trading, especially leveraged products, according to statements late Tuesday. They will expand the scope of required reporting of such trades to those by offshore investors via the northbound mainland-to-Hong Kong stock connect and treat foreign and domestic funds the same.

The pledges came after the exchanges imposed trading bans on Ningbo Lingjun Investment Management Partnership, which dumped a combined 2.57 billion yuan ($357 million) in shares within a minute Monday when indices fell rapidly.

The moves mark an escalation in regulators’ efforts to tighten scrutiny of quant hedge funds following their rapid expansion in recent years, as officials seek to reverse a slump in stocks that’s now entering a fourth year. Quant funds have sought to dispel concerns that they can amplify market volatility and fuel routs.
While quant trading can help with market liquidity and price discovery, such trades have “obvious technology, information and speed advantages” over smaller investors and can “amplify market volatilities” at certain points, the exchanges said. Such transactions, especially high-frequency trading, are often regulated more strictly in overseas markets to “prevent negative impact on market order,” they added.

Quant hedge funds use computer models to capture trading opportunities in markets from stocks to commodities. Chinese quants often seek to beat certain benchmarks by buying a group of stocks that are similar to members of the underlying indices, while so-called market-neutral strategies would also hedge such exposure by shorting stock index futures.

‘Abnormal Trading’​

Lingjun executed the sell orders starting from 9:30 a.m. as shares declined, “disrupting normal trading order,” the Shenzhen exchange said in a statement Tuesday. The Shanghai bourse imposed a similar freeze on the firm, which will be barred from trading stocks until Feb. 22.

Lingjun’s selling orders amounted to “abnormal trading behavior,” and the firm was warned multiple times for the same reason this year, according to the Shenzhen statement. The bourse will tighten supervision and maintain “zero tolerance” on any activities that harm investors’ legitimate rights, it said.

Beijing-based Lingjun will “resolutely comply” with the bourses’ restrictions and learn its lesson, the company said in a statement posted on its WeChat page. The investment accounts under its management bought a net 187 million yuan in shares on Monday, it added.

 

[Dona Ferentes]

perhaps i should have put this here, with the article focusing on Iron ore, and tangential stuff go in a China thread?

https://www.news.com.au/finance/economy/world-economy/australia-iron-ore-bonanza-to-end-as-china-enters-free-fall/news-story/2b2c16dcb91ccd516b83a5c59c1cbd8d

.

 

[divs4ever]

India would take up some of the excess , last i read they have plenty of low-grade iron

but if they are suckered into net-zero policy they will need higher grade iron ( and coal )

but how much more ??

is the billion dollar question

 

[Value Collector]

India would take up some of the excess , last i read they have plenty of low-grade iron

but if they are suckered into net-zero policy they will need higher grade iron ( and coal )

but how much more ??

is the billion dollar question

Yes, India will definitely be taking up some of the slack.

India was a net exporter of Iron Ore to other countries in Asia, however it is currently consuming so much steel that it is now a net importer of Iron Ore, So even though they have their own Iron Ore, the fact that they used to export this but are now consuming it all and importing extra is a big thing.

Not to mention that as their economy grows they are importing all sorts of products, appliances, machinery and equipment made of steel from other asian suppliers, especially china.

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

Also, the fear that Chinese housing will contract enough that it is permanently damaging to Iron ore companies or Australia as a whole are pretty over blown, There is still over 1 Billion people living in china that consume steel in their daily lives, not to mention they are still the factory of the world, shipping steel products made of steel every where.

Any contraction in steel demand will just see the price of iron ore drop, which will knock out some high cost producers and recyclers and eventually the iron ore price will stabilise at a sustainable level for the Lowe cost producers like FMG, BHP, RIO, VALE.

High Iron ore prices are nice while they last, but its a cycle, I am happy with $90 a tonne on average.

 

[qldfrog]

India would take up some of the excess , last i read they have plenty of low-grade iron

but if they are suckered into net-zero policy they will need higher grade iron ( and coal )

but how much more ??

is the billion dollar question

India: you get your answer here

 

[divs4ever]

India: you get your answer here
View attachment 171324

but that is currently , let's say China reduces imports by 10% ( long term ) the IO price should dip 5% to 10%

Indonesia is growing but not as rapidly as India and both have the ability to increase local mining ( in their own nations )

so if China cuts consumption does it trigger a self-sufficiency push in India and Indonesia leaving Australia with an over-supply issue ( until some mines close down)

 

[Value Collector]

India: you get your answer here
View attachment 171324

Yeah, but as I explained,

1. the majority of that Chinese demand isn’t going anywhere, it’s takes a lot of steel to maintain a population of over 1 billion people, and even more when you are the worlds factory.

2. India’s growth in steel production is taking their Iron the seaborne market that would normally head to China.

3. if China slows down its steel demand will reduce, but India can take up some of that slack, we don’t require India to produce steel at the same rate as China, they will be importing steel and equipment from China.

 

[divs4ever]

Yeah, but as I explained,

1. the majority of that Chinese demand isn’t going anywhere, it’s takes a lot of steel to maintain a population of over 1 billion people, and even more when you are the worlds factory.

2. India’s growth in steel production is taking their Iron the seaborne market that would normally head to China.

3. if China slows down its steel demand will reduce, but India can take up some of that slack, we don’t require India to produce steel at the same rate as China, they will be importing steel and equipment from China.

i see India catching up to China

China will need to consolidate and refine the infrastructure advances it has achieved ( you can't have wobbly crumbling railways when you have high-speed trains , China understands this , as will India when high-speed rail is common there

will India surpass China ( in my lifetime ) no i don't think so , China will still grow enough ( but slower than in the past )

but in say 50 years time , it could be very close ( assuming human civilization doesn't implode first )

 

[TimeISmoney]

i see India catching up to China

China will need to consolidate and refine the infrastructure advances it has achieved ( you can't have wobbly crumbling railways when you have high-speed trains , China understands this , as will India when high-speed rail is common there

will India surpass China ( in my lifetime ) no i don't think so , China will still grow enough ( but slower than in the past )

but in say 50 years time , it could be very close ( assuming human civilization doesn't implode first )

It will happen quicker than many think, a lot of Western world manufacturing has been pulled from China, and it has been dispersed all over Asia. Even the US is trying to do more on home soil.

 

[qldfrog]

It will happen quicker than many think, a lot of Western world manufacturing has been pulled from China, and it has been dispersed all over Asia. Even the US is trying to do more on home soil.

Maybe but if our io exports to India are multiplied by 100, it will still be 1,/40th of china.
Whatever happens to India, by the time they match China current level, I will be dead, in the meantime, China has plenty of time to boycott us, and change their sourcing to Africa on mines and countries I will "own"...
And Australia will suffer, less so the Rio Tinto/Vale of the world who will mine elsewhere

 

[Value Collector]

Maybe but if our io exports to India are multiplied by 100, it will still be 1,/40th of china.
Whatever happens to India, by the time they match China current level, I will be dead, in the meantime, China has plenty of time to boycott us, and change their sourcing to Africa on mines and countries I will "own"...
And Australia will suffer, less so the Rio Tinto/Vale of the world who will mine elsewhere

It’s more complex than that.

its not just that we might export more iron ore to India (which we will), it’s also that India is going to be exporting less Iron Ore to the rest of Asia, while it also importing more steel.

one thing I have learned over the years is that the Iron Ore and steel markets are complex.

for example, people might think that the USA producing more steel themselves would be bad for Australian Iron Ore exports, but its affect is mitigated but the fact that the USA increasing steel production consumes more scrap metal in the USA that would normally be sent to Asia competing with our Iron Ore, it also means more Brazilian Iron Ore is diverted to America instead of heading to Asia to compete with our Iron Ore.

this is just one example, there is dozens of economic factors that come into play that protect our export volumes as demand changes or shifts.

 

[Value Collector]

It will happen quicker than many think, a lot of Western world manufacturing has been pulled from China, and it has been dispersed all over Asia. Even the US is trying to do more on home soil.

Yep, which is great for development in the rest of Asia, but also China is still going to be a manufacturing power house for ever, firstly they have over 1 billion of their own people to service, and secondly as the rest of Asia develops and increases their standard of living they will be importing things from China even as their own manufacturing grows.

You can see this in Indian growth, imports of things from China like Air conditioners, earth moving equipment, vehicles, shipping containers, tools, cranes etc etc.

Even scrap metal imports are skyrocketing,

 

[mullokintyre]

Any miner in Western Australia, including those who mine iron ore at scalel, will be looking at the 8 day rainfall forecast chart below from the BOM and asking them selves, are we going to have a bit of weather related shutdown over the next two weeks?



Mick

 

[qldfrog]

Any miner in Western Australia, including those who mine iron ore at scalel, will be looking at the 8 day rainfall forecast chart below from the BOM and asking them selves, are we going to have a bit of weather related shutdown over the next two weeks?


View attachment 171938
Mick

I gave up using BOM for any forecast, only use current radar.
Whether (pun) as a result of their forging of temperature records or a fixed model, they are unable to predict even a 3 days forecast.
For info and I understand this is circumstancial but in the last 12h , we on the sunny coast just got above 200mm so purple colour...nowhere to be seen on the map.
I hope miners use more reliable forecasters such as Higgins or overseas models.
I genuinely believe the current BOM is a waste of money for it to be so easily outmatched by even individual forecasters.let's hope they fix their sxxt.
Weather long term and medium forecasts are critical to not only mining but also agricultural projects

 

[qldfrog]

I gave up using BOM for any forecast, only use current radar.
Whether (pun) as a result of their forging of temperature records or a fixed model, they are unable to predict even a 3 days forecast.
For info and I understand this is circumstancial but in the last 12h , we on the sunny coast just got above 200mm so purple colour...nowhere to be seen on the map.
I hope miners use more reliable forecasters such as Higgins or overseas models.
I genuinely believe the current BOM is a waste of money for it to be so easily outmatched by even individual forecasters.let's hope they fix their sxxt.
Weather long term and medium forecasts are critical to not only mining but also agricultural projects

So yes, just went to check 12h 235mm on sunny coast hinterland, and still under drizzle and clouds so expect much more today as steady rain...
Not good for miners (not many this side of the range) nor blokes like me with a big piping /reticulation task ahead, and a new paddock to fence with these expensive chinese steel star pickets