Australian (ASX) Stock Market Forum

Iron Ore

Jump to new
Vale hits China with 20% ore price rise
By Patti Waldmeir in Shanghai and Javier Blas in London

Published: September 6 2008 03:00 | Last updated: September 6 2008 03:00

http://www.ft.com/cms/s/0/2d93908a-7bab-11dd-b839-000077b07658.html

Vale of Brazil, the world's largest iron ore miner, has asked Chinese steelmakers to pay as much as 20 per cent more for ore supplies in an unprecedented move in the middle of an annual contract.

The request comes well ahead of April 2009, when new prices would traditionally apply, and in spite of a slowdown in economic growth. Iron ore prices surged earlier this year by the largest annual amount ever.

Chinese industry officials said this week that Vale had sent letters to several Chinese mills demanding an additional midcycle price increase of between 13 and 20 per cent from September 1. The increase is on top of a 65-71 per cent rise in February.

In June, Australian miners won a price increase of up to 96 per centafter negotiations with Chinese mills, to reflect the lower cost of shipping ore from Australia. Traders said that Vale's demand for an additional 20 per cent rise could partly reflect a drop in freight costs, which means that Brazilian ore delivered in China is now cheaper than earlier this year.

Vale declined to comment, only saying it was "constantly dialoguing with clients".

Analysts said Chinese mills oppose an increase because of fears domestic demand is slowing. But if they did pay more, they were likely to pass any costs rises on to customers, so driving up the price of goods such as cars or washing machines.

Baosteel, which negotiates with miners on behalf of the Chinese mills, said it was preparing a response to Vale's demand.

Additional reporting by Song Jung-a in Seoul , Yan Jin in Shanghai and Jonathan Wheatley in São Paolo

Copyright The Financial Times Limited 2008
 
I believe Brazil have a much lower impurity level than the rest of the world.

ie; it's the best of the best.
 
Rio de Janeiro, September 9, 2008 – Companhia Vale do Rio Doce (Vale), in compliance with a determination of Brazil’s Comissão de Valores Mobiliários (CVM), informs that it is negotiating with Asian clients the convergence of reference prices for iron ore to the same level of those charged to European clients. Currently, reference prices for Asian clients are 11.0% to 11.5% lower than prices for Europe, depending on the type of iron ore.

http://www.vale.com/vale_us/cgi/cgilua.exe/sys/start.htm?infoid=2393&sid=554
 
Kumba doubles iron-ore benchmark export price

By: Creamer Media Reporter
Published on 3rd October 2008
Updated 4 hours ago

http://www.miningweekly.com/article.php?a_id=144417

JOHANNESBURG (miningweekly.com) – JSE-listed Kumba Iron Ore (KIO) on Friday announced that it had concluded its benchmark price negotiations for the 2008/9 iron-ore year.

The producer expected the average benchmark export price for its products to increase by between 100% and 110% on a rand-a-ton basis.

This was owing to the higher lump-ore weighting of KIO’s product mix, together with a weakening of the rand.

The South African miner, a subsidiary of Anglo American, noted that the prices were well aligned with leading settlements reached by other iron-ore producers earlier this year.

The world’s largest iron-ore producer, Brazil’s Vale, agreed price increases between 65% and 71% with large steelmakers in the first quarter of the year.

BHP Billiton agreed a 97% increase in July, while Rio Tinto secured a 96,5% price rise in June. The agreed price increases were effective from April 1.

KIO commercial head Tino Smit said during a presentation in July, that the company expected the prices for iron-ore to remain strong for the next three to five years, as the world’s miners would battle to keep up with demand.

Demand for the steelmaking ingredient was mainly driven by growing Chinese consumption. China represented over 50% of the seaborne iron-ore market.

KIO’s share price gained more than 4% in early morning trade on the JSE, trading at R183,24 a share by 10:00.
 
Iron ore stocks have been smashed. FRS announced a very large upgrade during the week, and I think the price didn't even go green. UMC had some good news too, it did at least get a green day.

I think most stocks are only about 1/3 of what they were. Some, like BRM's share price are sitting on cash backing only.

I guess they are being rated as if their projects won't get there.

I wish I had a crystal ball that worked!
 
grace said:
Iron ore stocks have been smashed. FRS announced a very large upgrade during the week, and I think the price didn't even go green. UMC had some good news too, it did at least get a green day.

I think most stocks are only about 1/3 of what they were. Some, like BRM's share price are sitting on cash backing only.

I guess they are being rated as if their projects won't get there.

I wish I had a crystal ball that worked!
Click to expand...

you find the likes of BRM and FRS will get eaten up by the Big boys - BHP, RIO, FMG
 
agro said:
you find the likes of BRM and FRS will get eaten up by the Big boys - BHP, RIO, FMG
Click to expand...

Agro, there are some juniors around with nice resources. I've chosen on the basis of location to infrastructure ie transport.

Share prices are so cheap now, I'm guessing that if those three big boys don't make a move, asian money will scoop up some deposits way too cheaply.

Hope our government doesn't continue to let that happen.
 
Talking some of the decision makers in Governor Stirling Place and St Georges Terrace of Perth in last few days / weeks I think many small and mid cap iron ore producers are just looking for fund. Which making their projects not onlydelayed but also less viable with lesser demand, higher interest and tendency to see more small suppliers with little economy of scale

There is fear of recession to have come two years earlier.

Job advertisements are not any more glowing.

Big players like Rio and BHP are not increasing their worth

So the return on investment is coming slower and lower
 
The ASX quarterly report for MGX today does show that buyers are asking for delays in shipments of iron ore. Contractual or not, suppliers may have to fall into line or reduce production shortly. With the falling Aussie Dollar, (contracts being priced in US$'s) discounts may have to be agreed.
 
In regard to the recent large drops in demand for Iron Ore from China everyone thinks this is fully reflective of the current market and economy and has nothing to do with the Chinese government manipulating the share price and value of miners so that they can get a larger foothold.. If it is currently so dyre for Australian miners why is it that the Chinese are the only ones buying in...
 
adobee said:
In regard to the recent large drops in demand for Iron Ore from China everyone thinks this is fully reflective of the current market and economy and has nothing to do with the Chinese government manipulating the share price and value of miners so that they can get a larger foothold.. If it is currently so dyre for Australian miners why is it that the Chinese are the only ones buying in...
Click to expand...
Companies are having problems as the Chinese renege on iron ore agreements by refusing deliveries. This is putting Australian miners in dire straights as they try to dump ore at what ever price they can get. In these markets borrowing or raising cash is difficult.

BHP Billiton are steaming on with iron ore production and this will hit smaller iron ore miners even harder.
 
ArcellorMittal has just announced that it is cutting steel output by one third. The company cited demand falls in the housing sector and for cars.
 
Corus owned by Tata Steel, is cutting crude steel production by 30% or 1.5mtpa, in the next few months, at two UK blast furnaces and one in Holland.
 
noirua said:
Corus owned by Tata Steel, is cutting crude steel production by 30% or 1.5mtpa, in the next few months, at two UK blast furnaces and one in Holland.
Click to expand...

Hello noirua,

I don't know much about Iron or steel but thanks for the news. I have been trading in commodities but never traded in Iron or Steel as didn't find these commodities safe.
 
noirua said:
Corus owned by Tata Steel, is cutting crude steel production by 30% or 1.5mtpa, in the next few months, at two UK blast furnaces and one in Holland.
Click to expand...

More to that Tata Steel also owns Jaguar (vertical integration of using steel into car manufacturer), significant holders of Riversale Mining (RIV) means acquiring coking coal for their blast furnaces and got few things more in Australia

They are in stiff competition with Mittal Steel and the difference is Tata is more professionally managed and respected for good corporate governance . The actual ownership of Tatas in Tata Steel is however less than 4 percent
 
Small business "Drum Brokers Australia" (scrap steel) claim scrap steel has come down from $420- per tonne to $70 per tonne last week. They expect they will be getting $40- per tonne this week.
 

Similar threads

Miner
Iron Ore - General Commentary
6 7 8
Replies
150
Views
33K
mullokintyre
mullokintyre
Top