MMG to resume work at Queensland mine with fire threat contained
The Chinese miner said the fire at the Dugald River zinc mine will not have any material impact on its production outlook.
The surprise rally in the price of iron ore continued on Tuesday with the Northern China benchmark import price advancing to a four-month high.
Building on a 7% jump on Monday the steelmaking raw material exchanged hands for $50.50 a tonne on Tuesday according to data supplied by The SteelIndex. Iron ore is now up a stunning 36% from near decade lows hit December 11.
World Steel Association data released on Monday showed a sharper-than-expected drop in global steel output of 7.1% in January compared to last year. Production by Chinese steelmakers, which consume nearly three-quarters of the seaborne iron ore supply and forge nearly half of the global total, plunged 7.8% year on year following a 5.2% contraction in December.
Capital Economics forecasts a 5% fall in China’s steel output for the whole of 2016 but the London-based research company warned on Tuesday “this may have to be revised lower if this pace of output cuts is maintained.”
These near term changes have been amplified by disruption in the oil markets and broader global uncertainty
After 30 years of uninterrupted growth in steel output accompanying China’s dizzying rates of urbanization it is not surprising that the economy is maturing. But the steel data shows it may be happening faster than expected.
Andrew Mackenzie, CEO of BHP Billiton, confirmed this trend at the world number three iron ore miner’s financial results presentation yesterday. MacKenzie said although China’s headline GDP growth is in line with the company’s projections “the composition of the economy is changing more quickly than anticipated”:
“We see signs of a faster transition from an investment in heavy-industry led economy to one led by services.
“[This allows] for an acceleration in structural reforms including state-owned enterprises. But in the near term as industrial overcapacity is reduced this would further constrain demand for commodities.
“These near term changes have been amplified by disruption in the oil markets and broader global uncertainty. Both have affected sentiment and further increased volatility in commodity prices. We see this continue in the near and medium term.”
BHP said the “rate, magnitude and correlation of decline in commodity prices have been a surprise.” It believes prices will take some time to recover but “continues to see longer-term upside, particularly in copper and oil.” And even steam coal has a brighter future than iron ore according to this graph:
2 Comments
Bob Hawke
I wouldnt believe the data on committed copper projects. No project is safe in the current market. Best to keep the missus working if you can.
PaoloUSA
I would not believe BHP at all, now the Chinese transition to consumer economy and the new level of GDP became “expected”, few months ago they were not……..the usual game. At least, for once, we did not hear the usual “cash cost” mambo jambo. Investors must have a very short memory.