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Daily Iron Ore Price, Commodities and Precious Metals Update - November 2013
Topic Started: 4 Nov 2013, 01:05 PM (12,004 Views)
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CBA Commodities Daily Alert 15-November-13

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Details emerge from China’s Third Plenum

China has announced bold economic and social reforms, including
the easing of the one child policy and market pricing of fuels and
electricity, while also promising to speed up further financial
liberalisation.

Base metals and crude oil benchmarks finished higher despite US
industrial production unexpectedly contracting in October. Gold
futures climbed as the US dollar weakened. Thermal coal prices lifted
marginally to USD84.6/t (FOB Newcastle), while iron ore advanced
0.1% to USD136.80/t (CFR China).

The total number of drill rigs deployed onshore in the US rose from
1,754 to 1,762 last week. Rigs deployed in oil plays rose from 1,382
to 1,385, while rigs deployed in gas plays lifted from 365 to 370.

The US Environmental Protection Agency (EPA) is expected to cut
the required amount of renewable fuels to be blended with gasoline
from 18.15b gallons to 15-15.52b gallons in 2014.

Fitch believes the new LME warehouse rules to limit waiting times to
receive metal will likely pressure aluminium prices lower but the
longer it takes to remove the supply overhang in aluminium
stockpiles, the smaller the impact on aluminium prices. The new LME
warehouse rules will take effect from 1 April 2014.

According to Indian officials, India’s gold imports are expected to fall
~40% to 500t in FY14 (ending 31 March 2014), reflecting measures
implemented by India’s government and central bank to curb gold
imports as the country contains a record current account deficit.
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Perthite
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Emeco dips into the red.

http://au.news.yahoo.com/thewest/business/a/-/wa/19895123/emeco-sees-some-upside/
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Chinese economic reforms will have flow-on effects in Australia

November 18, 2013
Peter Cai

China has unveiled a comprehensive reform package to revitalise the world's second-largest economy after releasing an underwhelming communique early last week, heralding a fundamental shift in economic policy for Australia's most important economic partner.

Beijing's broad reform policy initiative, ranging from a taxation system overhaul to land reform, will have a direct consequence on Australian industrial sectors such as resources, tourism and real estate.

The Chinese government's decision to crack down on industrial overcapacity, especially in the steel sector, is most likely to have an impact on Australia's iron ore industry, which exported $39 billion worth of ores to China last year.

''As China's economy slowed, extra capacity became a major issue, one that the central government is now resolved to tackle,'' the official Xinhua News Agency reported.

China's steel industry, which collectively earned only 2.27 billion yuan or $397 million, for the first six months of the year is one of the worst-performing industries with a collective profit margin of 0.13 per cent. Under China's new economic policy, Beijing will not prop up the inefficient steel sector with favourable policies such as subsidised electricity, water or land prices, and will demand consolidation in the sector.

Read more: http://www.smh.com.au/business/chinese-economic-reforms-will-have-flowon-effects-in-australia-20131117-2xp2r.html
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http://au.news.yahoo.com/thewest/business/a/-/national/19909253/job-losses-at-rios-argyle/

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CBA Commodities Daily Alert 18-November-13

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Saudi Arabia’s oil exports at 8-year high

According to the Joint Organisation Data Initiative (JODI), Saudi
Arabia produced 10.12mb/d and exported 7.84mb/d of crude oil in
September. The Kingdom was the largest crude oil producer, just
eclipsing Russia, which pumped 10.08mb/d in September. Saudi
Arabia’s crude oil exports in September were at the highest level
since November 2005.

Commodity prices finished lower on expectations the US Federal
Reserve will taper stimulus sooner than markets expect after Federal
Reserve Bank of New York President, William Dudley, pointed at US
labour growth as a positive sign for the US economy. Prices also
declined as confidence amongst US homebuilders remained at a
four-month low in November. Iron ore advanced 0.1% to
USD137.00/t (CFR China).

Mongolia’s government said it is committed to resolving the financing
issues that are delaying the expansion of the Oyu Tolgoi copper and
gold project in Mongolia. The project is expected to annually produce
425ktpa of copper and 460koz of gold.

Jiangxi Copper and Freeport-McMoRan have agreed to increase fees
to process copper ore by 31% to USc 9.2/lb next year. The fee,
which is deducted from the price Jiangxi will pay for copper ore from
Freeport-McMoRan, potentially indicates the growing surplus of
copper ore.

India’s state-owned mining company, National Mineral Development
Corporation (NMDC), has left the domestic price of iron ore lumps
and fines unchanged at USD69/t and USD42/t, respectively.

The US Department of Energy (DOE) has conditionally approved
2.92Mtpa of additional LNG exports from the Freeport LNG project to
non-Free Trade Agreement countries. The terminal can now export a
total of 13.10Mtpa of LNG.
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China's iron ore futures may finally give it pricing benchmark

Mon Nov 18, 2013 2:20am EST

By Manolo Serapio Jr and Silvia Antonioli

Nov 18 (Reuters) - China is making its third attempt in two years to have a bigger say in pricing iron ore. This time it may have hit on the winning formula.

Brisk trade in the first month on Dalian iron ore futures brings Beijing a big step closer to its goal of a China-based pricing benchmark for the world's second most traded commodity after oil, and the biggest earner for top miners Vale , Rio Tinto and BHP Billiton .

China, the world's biggest buyer of a raft of raw materials from copper to coal, is pushing hard to establish pricing benchmarks for commodities.

Iron ore is China's largest import commodity by volume and, spending nearly $100 billion annually, it wants to be sure it pays a fair price. The government has in the past accused the big miners of delaying shipments and holding back stocks to pump up indexes published by data providers like Platts, used as benchmarks to price cargoes..

The Dalian contracts are the world's only iron ore futures backed by physical delivery, giving China a first move advantage it doesn't have with grains or metals. If the government allows foreigners to trade derivatives in the Shanghai Free Trade Zone, this would clear a major hurdle that held up previous attempts to set a benchmark.

"If more customers use the Dalian futures, why would anyone use Platts?" Li Xinchuang, deputy secretary general of the China Iron and Steel Association, told Reuters.

"(Platts) can't represent consumers' interest as it represents more of the interest of producers."

Platts, a unit of McGraw-Hill Financial, said its pricing process is transparent.

Volume on the most-active May contract at the Dalian Commodity Exchange reached more than 121 million tonnes since its Oct. 18 launch. That was nearly seven times the total volume of derivative swaps that top global clearer Singapore Exchange handled in all of October.

"I think this is massive for the market and will likely change the way iron ore is priced," said a trader at a major commodity trading house that has exposure in both the physical and swaps markets.

"We will see the physical prices come closer to the futures prices and then the indices will die down in a couple of years."

Drawn by brisk volumes in Dalian, a mid-size Chinese trading company cut its exposure to over-the-counter swaps by half to invest the funds into Dalian iron ore futures, a manager at the Shanghai-based firm said.

Beijing has been trying to create an iron ore benchmark since the industry three years ago shifted to spot rates, after 40 years of fixing contract prices annually. It created its own price index in 2011 and then a physical trading platform last year.

China-based futures can thrive on domestic hedging demand. But to really become a global benchmark the sellers need to be involved, especially the major Australian miners who supply the bulk of the country's ore, and it's not clear this will be the case.

Rio Tinto does not plan to trade Dalian iron ore futures, chief executive Sam Walsh said, citing company policy toward financial derivatives in general.

BHP Billiton declined to comment when contacted by Reuters but said it provided feedback to the Dalian exchange regarding specification and physical delivery aspects of the futures contract.

Probably the biggest hurdle is the limits on foreign firms trading Chinese derivatives, and it is the potential changes to this restriction in the Shanghai Free Trade Zone that traders will be watching closely.

"Right now, benchmarks are based where the industry started but what is required are new rules which could be set up in the Shanghai free zone," said Marco Dunand, chief executive of global trader Mercuria.

"That could transform the sector entirely." ($1 = 6.0968 Chinese yuan) (Additional reporting by Maytaal Angel and Ron Bousso in LONDON, Sonali Paul in MELBOURNE, Ruby Lian in SHANGHAI and Florence Tan in SINGAPORE; Editing by Michael Urquhart)

Read more: http://www.reuters.com/article/2013/11/18/china-ironore-futures-idUSL3N0IB28H20131118
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CBA Commodities Daily Alert 19-November-13

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OECD cuts world growth forecasts

The OECD cut its global growth forecasts for this year and next as
emerging-market economies, including India and Brazil, cool. The
world economy is expected to expand by 2.7% this year and 3.6%
next year, instead of the 3.1% and 4% predicted, respectively, in
May. The new OECD numbers align closely with our own views for
2.6% growth this year and 3.6% growth in 2014.

Commodity prices finished mostly higher as the US dollar declined.
Markets remain in wait for further insights on the timing of stimulus
as US Federal Reserve Chairman, Ben Bernanke, is set to address
Washington later today. US WTI crude oil also lifted on expectation
that crude oil demand increased after refineries return online after
seasonal maintenance. Iron ore fell by 0.5% to USD136.30/t (CFR
China).

Despite Northam Platinum agreeing to a 9% wage increase for its
South African workers, the company’s miners still remain on strike,
raising ominous signs for similar wage negotiations between South
African mining unions and Lonmin, Anglo American Platinum and
Impala Platinum, the world’s largest platinum mining companies.

According to the Japan Iron and Steel Federation, Japan’s crude
steel output rose 2.5% m/m and 7.7% y/y to 9.52Mt in October.
From January to October, Japan’s crude steel output has lifted 2.0%
y/y to 91.95Mt.

Bathurst Resources plans to begin production at its 1.5Mtpa
Escarpment hard coking coal project in New Zealand by 1Q14.

According to the Cobalt Development Institute, world cobalt output
has increased 11% y/y to 41.7kt in 1H13.

Queensland Gas Company, a subsidiary of BG Group, said that its
8.5Mtpa Queensland-Curtis LNG project in Australia is over 70%
complete and is on track to begin production in 2014.
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CBA Commodities Daily Alert 20-November-13

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World steel output grows solidly in October

Global steel output of 134.3Mt in October was up 1.4% in the month,
and 4.2% year-on-year for the first ten months of 2013. Production is
being led higher by China, whose October output of 65.1Mt was
10.1% higher year-on-year, leaving year-to-date output 9.7% higher
than the same period last year. Japanese steel output is also growing
solidly again. Iron ore and coking coal demand should be supported
if output growth continues.

Prices were mixed as markets reacted to the US FOMC minutes
which showed an openness to consider asset purchase tapering
from the December meeting, subject to economic data, of which
labour force data has been stronger recently. Precious metals fell as
the US dollar rose, base metals were mixed, while crude oil
benchmarks were stable-to-higher as a nuclear agreement with Iran
looked to slip into next week. Iron ore rose slightly to USD136.40/t.

Brazil’s iron ore exports rose 12.1% in October to 32.5Mt. Exports to
China rose 36.7% mom and 28.2% yoy to 18.8Mt, while exports to
the rest of the world fell 10.2% mom and 23.8% yoy. The iron ore
market remains relatively tight, given that it has absorbed higher
Brazilian exports while iron ore prices have remained firm.

In US economic news, headline CPI inflation dipped 0.1% in October
to be up just 1.0% over the year - the smallest rise in four years. Core
inflation held steady at 1.7% over the year. Existing home sales fell
3.2% in October, weighed down by higher mortgage rates and tight
supply. But the median price of a previously owned home was up
12.8% on a year ago

The International Copper Study Group (ICSG) expects a 5.2% rise in
copper concentrate output to drive 4.5% growth in mine copper
supply in 2014, which would exceed expected demand growth and
push copper markets into a 632,000 tonne surplus in 2014.
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Iron ore, gold, soybeans and copper will probably drop at least 15 per cent next year

Iron ore, gold, soybeans and copper will probably drop at least 15 per cent next year as commodities face increased downside risks even as economic growth in the US accelerates, according to Goldman Sachs.

The risks are strongest for iron ore, and follow increases in supplies, analysts including Jeffrey Currie wrote in a report yesterday that identified the New York-based bank’s top 10 market themes for the coming year. Price pressures will mostly become visible later in 2014, the analysts wrote, forecasting that bullion, copper and soybeans will decline to the lowest levels since 2010.

Commodities as tracked by the Standard & Poor’s GSCI Index lost 5 per cent this year, led by declines in corn, as supplies surged, and precious metals, on expectations the Federal Reserve will taper stimulus. Goldman described the forecast losses for iron ore, gold, soybeans and copper as significant, and said that they could help weaken currencies in producing countries, including the Australian dollar and South African rand.

‘‘Last year, we pointed to the ongoing shift in our commodity views, ultimately towards downside price risk,’’ the analysts including Currie wrote. ‘‘The impact of supply responses to the period of extraordinary price pressure continues to flow through the system.’’

Read more: http://www.smh.com.au/business/markets-live/markets-live-fourth-day-of-losses-20131121-2xwq0.html
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doubleview
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Perth bulls head in sand please!

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oh shit!!
Edited by doubleview, 22 Nov 2013, 05:07 AM.
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