China’s third plenum meeting concluded with the government indicating plans to elevate the role of markets in allocating resources in the economy. The government also signalled plans to “facilitate a management system to oversee the ownership and use of natural resources by setting a cost of environment protection”. The communique issued after the meeting concluded was scant on policy reform detail; more concrete guidance on the path to reform is expected over coming days and weeks.
Commodity prices finished mostly lower on concern the US Federal Reserve will taper stimulus sooner than markets expect after Atlanta Federal Reserve President, Dennis Lockhart, said discussions to scale back stimulus may begin as early as next month. US WTI crude oil prices also declined on forecasts US crude oil inventories rose last week. Iron ore remained unchanged at USD135.90/t (CFR China).
China’s refined copper output lifted 23% yoy and 2.3% mom to a record-high of 637,000 tonnes in October, reflecting new copper smelting capacity. China’s iron ore output rose 8.0% yoy but declined 1.3% from last month’s record level to 134.9Mt in October.
RUSAL, the world’s largest aluminium producer, recorded a smaller loss in 3Q13 from 2Q13 as the company shut unprofitable smelters and cut costs. The company’s aluminium output has declined 5.8% in the first nine months of this year to 2.95Mt, in line with RUSAL’s plans to curtail 325kt and 648kt of aluminium capacity in 2013 and 2014, respectively.
The International Energy Agency (IEA) expects the US to overtake Saudi Arabia and Russia to become the world’s largest oil producer by 2015 due to output from shale oil deposits. By 2035, the agency forecasts crude oil consumption will expand 14mb/d, or 16%, to 101mb/d, with US WTI crude oil prices expected to average USD128/bbl.
BC Iron managing director Morgan Ball predicts iron ore prices will remain comfortably above $US100 a tonne for the next year or two and has labelled the largely unexpected bonanza as "money for jam".
Speaking after addressing a group of satisfied shareholders in Perth yesterday, Mr Ball said BC Iron's cash costs at the Nullagine mine -- expected to be below $50 a tonne this year -- meant its margins would remain strong.
Iron ore ground hog denial day comes to mind here!
Its 2015 onward that the glut of supply comes on to the market all @ once!
Fortescue know it, thats why they are scurrying to get that debt down!
FMG paying down debt is just good prudent management.
Why don't you short FMG if you expect iron ore miners to get into trouble. Plenty of people have done their shirts doing that, why not toss your money away as well.
Let me guess - you've also become used to earning $225K pa and it's not there for you anymore and it's the end of the world?
I'd love to empathise, but I just can't. Plenty of good people bring up their families on an income of $60K and you can too if you adjust your lifestyle. Get rid of the top of the range Kluger and the wifes PRADA designer goods.
Any expressed market opinion is my own and is not to be taken as financial advice
FMG paying down debt is just good prudent management.
Why don't you short FMG if you expect iron ore miners to get into trouble. Plenty of people have done their shirts doing that, why not toss your money away as well.
Let me guess - you've also become used to earning $225K pa and it's not there for you anymore and it's the end of the world?
I'd love to empathise, but I just can't. Plenty of good people bring up their families on an income of $60K and you can too if you adjust your lifestyle. Get rid of the top of the range Kluger and the wifes PRADA designer goods.
Don't you ever tire of being a condescending twat pete?
PERTH, Nov 13 (Reuters) - Iron ore miner Fortescue Metals Group, racing to pay down $9.3 billion in net debt as sales to China soar, expects to shake off its junk credit status by 2015 to seal a spot alongside sector behemoths Rio Tinto and BHP Billiton.
Just 15 months ago, as iron ore prices plunged, Fortescue was considering the part-sale of its prized rail and port assets to help pay off the mountain of debt it amassed to build the world's fourth-largest iron ore mine in just five years.
But a price rebound allowed chairman Andrew Forrest to announce on Wednesday the group would pay off $1 billion by Dec. 20 of $2.04 billion in notes that were due to mature in 2015, and expected to redeem the balance in coming months.
"Don't be surprised if in the next several weeks, several months, we do another $1 billion," Forrest told reporters after the company's annual meeting.
Forrest has been Fortescue's largest shareholder from its start a decade ago and last week acquired a further 2 million shares on market, taking his stake to 32.9 percent.
Fund manager BlackRock Group this month acquired just over 5 percent of the stock.
In another sign Fortescue has arrived, it is set to become a "peer" company used by BHP when when it calculates incentive payments for its top managers.
Fortescue has said it will focus on paying down its debt as quickly as possible now that it has passed the peak of its mine expansion program and is nearing its targetted production rate of 155 million tonnes a year.
"We'll be at investment grade metrics I'd say within 18 months," Forrest said.
Fortescue still has a junk corporate credit rating, even after Standard & Poor's last week raised the miner to 'BB' from 'BB-'.
However its senior secured debt rating was revised up to 'BBB-', putting it at investment grade, based on its rising output, competitive cost position and long reserve life.
"Its limited product diversity and high exposure to China's steel industry and volatile commodity prices offset these strengths," S&P said on Nov. 6.
CONFIDENT ON CHINA DEMAND
Forrest is confident that iron ore prices, which at more than $135 a tonne have proved more resilient this quarter than analysts had expected, will stay above $110 a tonne over the long term, underpinned by Chinese demand for the steel-making ingredient.
"We see steel intensity continuing to increase for the next 20-30 years in China," he said.
China makes about 700 million tonnes of steel a year and each tonne requires about 1.6 tonnes of iron ore. That works out at annual iron ore demand of about 1 billion tonnes.
Broker Bell Potter calculates Fortescue's break even price for iron ore production is $69 a tonne, and forecasts net profit will climb 70 percent to $2.98 billion in fiscal 2014.
Fortescue's shares have doubled in value since June, thanks to the surprising strength in the iron ore market and the company's moves to cut debt.
Analysts have suggested Fortescue could lift its output to as high as 180 million tonnes annually. That would bring it even closer to Rio's capacity of 290 million tonnes and BHP's of 212 million.
Fortescue said a push past 155 million tonnes is not on the agenda at the moment but left the door open.
"I wouldn't be surprised if they are able to squeeze more out of the lemon than 155, but let's just get to that fabulous milestone first and then set ourselves a challenge beyond that," said Forrest.
FMG paying down debt is just good prudent management.
Why don't you short FMG if you expect iron ore miners to get into trouble. Plenty of people have done their shirts doing that, why not toss your money away as well.
Let me guess - you've also become used to earning $225K pa and it's not there for you anymore and it's the end of the world?
I'd love to empathise, but I just can't. Plenty of good people bring up their families on an income of $60K and you can too if you adjust your lifestyle. Get rid of the top of the range Kluger and the wifes PRADA designer goods.
Geez a lot of assumptions !
What a bizzare picture you have painted of the bears!
Klugers, pradas, designer gear and thinking its the end of the word and you forcing your self the empathise!
Is this what happens when the delusion takes hold, are you weining yourself off your meds.
Also if you read any of my posts you would know I own some FMG !
Commodity prices finished mostly higher after Federal Reserve chairman nominee, Janet Yellen, signalled continuing stimulus. She indicated the “benefits of QE still exceed the costs” and that the Fed "must not remove support while recovery is fragile”. Iron ore advanced 0.4% to USD136.60/t (CFR China).
In its monthly oil market report, the International Energy Agency (IEA) said that Brent crude oil prices may come under upside pressure as unrest in Libya and Iraq disrupts crude oil production. The IEA upgraded demand in 2014 marginally, now expecting crude oil consumption to lift 1.2% to 92.1mb/d. The agency also upgraded crude oil production from non-OPEC countries to 56.5mb/d in 2014, up from last month’s forecast of 56.4mb/d, citing faster-thanexpected growth in crude oil output from the US and Russia. The IEA expects a “comfortable” balance early next year.
According to the World Gold Council (WGC), gold demand declined 21% y/y to 869t in 3Q13, largely reflecting weaker investment demand and central bank buying. Jewellery demand lifted 5% y/y to 487t in 3Q13, as consumers took advantage of lower gold prices.
Gold imports by India, the world’s largest gold consumer, dropped 62% y/y and 74% q/q to 85t in 3Q13, reflecting import restrictions implemented by India’s government and central bank in an attempt to contain a record current account deficit.
Sumitomo metals said that if Indonesia does implement a mineral ore export ban as planned in January 2014, it will seek to purchase more nickel ore from The Philippines and New Caledonia. The company also said it expects to produce 30kt of refined nickel in 2014.
Vale has agreed to sell its 20% stake in two natural gas exploration projects in Brazil’s Parnaiba Basin, as the company executes a divestment strategy to boost profit margins.
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