The department lowered its forecast for iron ore prices to $54.40 a tonne for this year and $52.10 in 2016 as China’s output of steel weakens.
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Iron ore’s decline eroded gains seen in the second quarter, when prices rebounded from a decade-low as shipments missed expectations.
As the Greek population was voting “no” to imposed austerity measures from its creditors in last weekend’s referendum, Chinese authorities were putting together a series of measures aimed at pumping money into its equity market.
But many analysts predict a fall to below $US40 in the next year or two. Since 2000, Australia’s global iron ore market share has increased from 34% to 50%, while it also lowered its position on the cost curve. Silver, too, went up 0.1% at $15.05 per ounce, after a 4.4% drop in the previous session, when it touched its lowest since December 2014.
Iron ore for immediate delivery to China’s Tianjin port.IO62-CNI=SI plummeted 11.3 percent to $44.10 a tonne on Wednesday, according to The Steel Index (TSI). As the commodity’s price falls, the world’s largest producers continue to ramp up their production rates to reduce their cost per tonnage, resulting in a massive supply and demand imbalance. “That doesn’t change the outlook for iron ore, which is still poor”.
Based on the production costs of Australia’s producers, all but Rio BHP and possibly Fortescue are now producing at a loss.
Having cited 75 cents as a preferred level for the exchange rate, Reserve Bank governor Glenn Stevens now believes a further depreciation seems “both likely and necessary” given the significant declines in key commodity prices. Meanwhile, significant volumes of imported iron ore have been arriving at Chinese ports, increasing supply pressure and negatively impacting prices.
That thinking has helped lead such companies as Freeport-McMoRan Inc.to expand a copper mine in Arizona, Anglo American to construct a huge mine and 326-mile pipeline in Brazil, Alcoa Inc.to build an aluminum smelter in Saudi Arabia and Rio Tinto and BHP Billiton to build titanic new mines in the deserts of Western Australia.
“They (the funds) are shorting commodities to hedge their longs on stocks”.
Under the agreement, Atlas has agreed to pay BGC an option fee of A$3.45m ($2.6m) in its shares representing A$3m ($2.3m) credit against the future purchase of the Mt Webber crushing as well as screening plant.
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Investors who booked the new bonds were delighted after the notes rocketed more than four points on the break, to over 102 on the bid side.
