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Daily Iron Ore Price, Commodities and Precious Metals Update - September 2013
Topic Started: 2 Sep 2013, 06:00 PM (13,041 Views)
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CBA Commodities Daily Alert 30-August-13

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China’s PMI above forecast in August

China’s manufacturing PMI lifted from 50.3 in July to 51 in August,
above forecasts of 50.6. A reading above 50 indicates an expansion.

Commodity prices drifted lower as risks of an attack on Syria
subsided following a decision by UK lawmakers against military
action. Prices also declined on expectations that the Federal Reserve
will taper stimulus after the US economy grew faster than expected
in 2Q13. Thermal coal declined by 0.8% w/w to USD78.6/t (FOB
Newcastle). Iron ore fell by 0.4% to USD137.70/t (CFR China).

Iron ore miners in India believe that reducing the iron ore export duty
from 30% to 20% may not boost iron ore exports, unless the railway
tariff charged on iron ore exports is also reduced.

Japan’s Sumitomo Corporation estimates an aluminium surplus of
883kt and 994kt in 2013 and 2014, respectively.

The total number of drill rigs deployed onshore in the US remained
flat at 1,776 last week. Rigs deployed in oil plays rose from 1,382 to
1,388, while rigs deployed in gas plays declined from 387 to 380.

China’s Ministry of Transport is considering plans to allow some of its
ports to receive larger shipping vessels. The move will allow Brazil’s
Vale to deliver iron ore via its Valemax ship fleet, which should see
transport costs cut by one-third and improves Vale’s cost
competitiveness with BHP Billiton, Rio Tinto and Fortescue.

India’s power tariff is expected to rise significantly next year for
electricity consumers, which may burden India’s economic growth,
as the devalued Indian rupee increases the cost of thermal coal
imports for India’s thermal coal power plants.
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CBA Commodities Daily Alert 02-September-13

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Europe PMIs continue to expand

Base metal prices lifted on demand hopes after China’s
manufacturing sector expanded faster than expected in August. Gold
futures and crude oil benchmarks eased as tensions in Syria
subsided after US President Barack Obama said he will seek
approval from the US Congress before taking military action. Iron ore
advanced 0.7% to USD138.70/t (CFR China).

Copper shipments and production from Freeport-McMoRan’s
Grasberg mine in Indonesia have returned to normal levels after a
fatal accident on 15 May forced the mine to shut. Grasberg is the
world’s second-largest copper mine and produced 315kt of copper
and 862koz of gold in 2012.

Talks are ongoing with striking workers at Libya’s oil terminals. The
country is producing under 300kb/d of crude oil, despite having a
capacity of 1.6mb/d, which it last pumped in July 2012.

Tiger Realm Coal’s Amaam project in Russia is expected to produce
0.86Mtpa of coking coal and 0.14Mtpa of thermal coal by 2H15.

Attila Resources plans to develop its Kodiak coking coal project in
US, which is expected to produce 1.8–2Mtpa of coal.

Esso Highlands, the operator of the PNG LNG project, said the
project is more than 90% complete and on schedule for first delivery
in 2H14. The project is expected to supply 6.9Mtpa of LNG.

China’s LNG imports lifted 1.2% y/y to 1.35Mt in July, while the
average price declined 10.2% y/y to USD11.52/mmbtu.

Transportation from the Gandhamardan 3Mtpa iron ore mine in the
Indian state of Odisha has commenced. Odisha produced 62Mt of
iron ore in 2012-13 and expects to produce 65Mt in 2013-14.

India’s thermal coal output lifted 1.2% y/y in July to ~40Mt, the
lowest level this year and below the July target of ~43Mt.
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Rio Ships first iron ore from newly expanded operations

Mon Sep 2, 2013 04:39am GMT

Rio Tinto PLC (RIO) said it had begun shipping iron ore from its newly expanded port, rail and mine facilities in Western Australia, one of the biggest mining projects in the resource-rich country.

The first 165,000-metric-ton shipment is bound for Nippon Steel & Sumitomo Metal Corp.'s (5401.TO) Kimitsu plant in Tokyo, said Rio Tinto, which has boosted annual capacity at its Australian operations to 290 million tons.

"Given the demanding operating environment in Western Australia over the recent period, this stands as a noteworthy achievement," Rio Tinto iron-ore chief executive Andrew Harding said in a statement. "Our focus will now be to ensure the ramp-up to full run-rate is achieved safely and efficiently."

Construction of port, rail and power infrastructure for a second expansion phase, which would increase Rio's capacity to 360 million tons, is continuing, the company said. The world's No. 2 producer of the steelmaking ingredient will shortly decide whether to invest around US$5 billion to increase output to that level, it added.

"A number of options for mine capacity growth are under evaluation including incremental tons from further low-cost productivity improvements, expansion of existing mines and the potential development of new mines," Rio Tinto said.

Read more: http://ironoreteam.com/rio-ships-first-iron-ore-newly-expanded-operations
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RBA Index of Commodity Prices

August 2013

Release date: 2 September 2013

Preliminary estimates for August indicate that the index rose by 0.2 per cent (on a monthly average basis) in SDR terms, after rising by 1.6 per cent in July (revised). The largest contributors to the rise in August were increases in the prices of iron ore and gold. The prices of base metals also increased, while the prices of many rural commodities declined in the month. In Australian dollar terms, the index rose by 2.7 per cent in August.

Over the past year, the index has fallen by 7.3 per cent in SDR terms. Much of this fall has been due to declines in the prices of coking coal, thermal coal and gold, although the price of iron ore has risen. The index has increased by 7.8 per cent in Australian dollar terms over the past year.

As indicated in previous releases, preliminary estimates for iron ore, coking coal and thermal coal export prices are being used for recent months, based on market information. Using spot prices for these commodities, the index increased by 1.3 per cent in August in SDR terms, to be 1.7 per cent lower over the past year.

For further details regarding the construction of the index, please refer to ‘Changes to the RBA Index of Commodity Prices: 2013’ in the March 2013 issue of the Bulletin.

Details are in the attached table and graph.

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skamy
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"A number of options for mine capacity growth are under evaluation including incremental tons from further low-cost productivity improvements, expansion of existing mines and the potential development of new mines," Rio Tinto said.


If they go ahead and Capex increases again on top of a housing construction recovery, Perth is going to get even more crazy than it was at the height of the investment boom. Rents will be back under pressure as will wages as they compete for a limited pool of workers. The height of the investment boom occurred in a stagnant economy and builders competed very hard for the work. Rio et al might find it a bit more difficult to squeeze Aussie building companies this time around. A lot of builders have lost money on resources projects and they may not be too keen to dive in at such low prices for a second round.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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Perthite
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skamy
4 Sep 2013, 01:08 PM


If they go ahead and Capex increases again on top of a housing construction recovery, Perth is going to get even more crazy than it was at the height of the investment boom. Rents will be back under pressure as will wages as they compete for a limited pool of workers. The height of the investment boom occurred in a stagnant economy and builders competed very hard for the work. Rio et al might find it a bit more difficult to squeeze Aussie building companies this time around. A lot of builders have lost money on resources projects and they may not be too keen to dive in at such low prices for a second round.
???

Do you even follow capex?
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skamy
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Perthite
4 Sep 2013, 02:18 PM
???

Do you even follow capex?
Did you read the above article? Capex dropped a bit this year, but it is still huge, mining capex alone in Australia is more than a 1/4 of the total business Capex in the US.
Roy Hill is looking increasingly likely and now we have Rio talking possible new mines investment again. There is a risk that mining Capex will fall but there is also a risk that it might not fall that much for a few years yet.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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Perthite
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skamy
4 Sep 2013, 03:01 PM
Did you read the above article? Capex dropped a bit this year, but it is still huge, mining capex alone in Australia is more than a 1/4 of the total business Capex in the US.
Roy Hill is looking increasingly likely and now we have Rio talking possible new mines investment again. There is a risk that mining Capex will fall but there is also a risk that it might not fall that much for a few years yet.
This has already been debunked. Rio found the cash by cutting 5 billion from contractor services.

The expansion comes up for approval in November. So it is an if.

What is needed is mega projects. Some estimates had Browse at 80 billion.

Within a year.
Edited by Perthite, 4 Sep 2013, 03:16 PM.
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CBA Commodities Daily Alert 03-September-13

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US manufacturing expands above forecast

The US ISM manufacturing gauge rose from 55.4 in July to 55.7 in
August, well above expectations of 54. A reading above 50 indicates
an expansion.

Crude oil benchmarks lifted on supply risks and gold futures
advanced on safe haven demand after President Barack Obama won
support from leaders in the US Congress for a military strike on Syria.
Iron ore remained flat at USD138.70/t (CFR China).

The National Union of Mineworkers, representing almost two-thirds
of South Africa’s gold miners, has commenced a strike over wages.
South Africa accounts for ~6% of the world’s mined gold supply.

Atlas Iron is expected to begin construction on its ~2.5Mtpa Abydos
iron ore mine from April 2014.

Rio Tinto’s Oyu Tolgoi venture in Mongolia has replaced three board
members in an attempt to progress the project’s expansion, which
has stalled as the Mongolian government and Rio Tinto disagree on
financing. Oyu Tolgoi is expected to produce 425kt of copper and
460koz of gold.

India’s Vedanta Aluminium has asked the Odisha government to
pressure National Aluminium Company (NALCO) to sell its excess
alumina to the company’s 1.2Mtpa Jharsuguda aluminium smelter.

Aluminium Corporation of China (CHALCO) has suspended a
370ktpa aluminium smelter project in Malaysia that was scheduled to
commence later this year.

India’s commerce and industry ministry is confident that a proposal
to resume iron ore exports will pass through government this month
with the support of the prime minister and the finance ministry.
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Rio eyes cost reductions: report

Rio Tinto Ltd chief executive officer Sam Walsh has directed the group's iron ore unit to cut the cost of operations in the Pilbara, The Australian reports.

According to the newspaper, analysts touring Rio's Pilbara operations this week were told the mining giant was eyeing a reduction in cash costs from $US47 a tonne in 2012, to possibly as low as $US35.50 in 2020, including capital to maintain the business.

The Australian reports Rio Tinto is also looking at significant capital expenditure reductions, with the miner aiming to spend only $US140 a tonne for every additional tonne of capacity as it pushes toward an annual production rate of 360 million tonnes, from 290 million tonnes.

The previous capital intensity figure being targeted was in the mid $US150-a-tonne range.

Read more: http://www.businessspectator.com.au/news/2013/9/4/resources-and-energy/rio-eyes-cost-reductions-report
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