The views expressed are his own.-.
Advertisement
However, he still wants to see the Australian dollar to fall further to reflect slumping commodity prices, even though the exchange rate has already skidded to a six-year low to about 74 USA cents.
However, with the price of iron-ore falling since the start of this year, a debate had emerged on whether the industry or government policy-makers could have acted to ensure that Australia could have maintained a foothold in a higher priced world.
Atlas’s break-even price is far above the sub-$20 per tonne levels boasted of by Rio Tinto and BHP but is in line with other juniors, according to UBS, which calculates BC Iron needs $52 a tonne to generate cash and Arrium Ltd $51.
The top suppliers, including Rio in Australia and Brazil’s Vale remain intent on increasing supply as they seek to boost volumes and reduce costs per ton, expanding a glut even as demand in China slows.
Benchmark iron ore for immediate delivery to the port of Tianjin in China was last trading at $US52 per tonne, a 3.9 per cent fall from its previous close.
Iron ore miner Vedanta led commodity stocks lower as a strong Dollar, weakness in Chinese markets and the Greek referendum vote going against the EU’s bailout hurt sentiment on miners, steel producers and aluminium makers.
It’s certainly a laudable achievement that Australia’s iron ore producers managed to increase their share of the seaborne market from 34 percent in 2000 to 50 percent, while keeping costs at the lower end of the curve.
“The slump in equities reflects a lack of confidence in China’s economy, which damps the demand outlook for industrial commodities”, Wu Zhili, an analyst at Shenhua Futures Co.in Shenzhen, said on Wednesday before the price data. PJP said any intervention was likely to be “ineffective at best and counter-productive at worst”. Australia’s average annual iron ore production rose from 170 million tonnes to around 660Mtpa between 2000 and 2014, with the price hitting an all-time high of $US190 per tonne in 2011.
” class=”local_link” target=”_blank”>lead to sharp decline in industrial activity in that country”.
While Rio and BHP would have been in good company in forecasting a rise to at least 1 billion tonnes a year of Chinese steel output a few years back, they are probably the only ones left who still expect this. SHARE MARKET: Added to its woes, China is facing a major slump in share prices, raising fears of a further economic slowdown.
Advertisement
The fast-changing makeup of the iron ore market indicates it will be an industry that, by and large, will only support the biggest miners.
