The stunning gain in the iron ore price follows a weekend announcement that the Chinese government will target growth of 6.5 per cent to 7 per cent for 2016, a healthy target that encouraged investors.
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Mr Fitzgerald said there were a lot of customers in countries such as South Korea, Japan and China which were looking forward to receiving Roy Hill’s iron ore.
Blending Vale’s ore with lower quality material from Fortescue would bring the grade down to a more standard quality, and create a better sintering product for Chinese steel mills, replicating what traders and the mills now do for themselves.
Separately, TheStreet Ratings team rates the stock as a “sell” with a ratings score of D.
Chinese Premier Li Keqiang also outlined pledges to spend 800 billion yuan ($A164.3bn) on railway construction and 1.65 trillion yuan ($A338.9bn) on building roads.
Yesterday Fortescue shares jumped some 20 per cent on the iron ore price strength and today the company announced that it proposes to enter a joint venture agreement with Brazilian iron ore mining giant Vale S.A. “The market has only recently been opened up to wider markets by global exchanges utilising iron ore swaps, and the Singapore Exchange offering futures contracts from previous year”, he said.
TSI’s benchmark FOB Australia premium coking coal price hit a five month high of $81 a tonne on Monday a double digit gains since bottoming November 23 at $73.40 a tonne.
While the Goldman analysts argue that commodity-specific supply issues are driving short-term swings in the price, the bulls hope a persistent rally in commodities does reflect firming demand in what could be an improving economic backdrop.
Mr Basto said that the mining industry would need to continue to meet the challenges of a lower price environment through productivity.
Vale, which also published the statement on its website, is the world’s largest iron ore producer and Fortescue is the world’s fourth largest behind Vale, BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO).
The joint venture, which plans to blend 100 million tonnes a year of ore, or 10 percent of the volume China imported last year, will need approval from China’s Ministry of Commerce.
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BHP iron ore asset president Edgar Basto said an anticipated increase of around 50 million tonnes of seaborne iron ore supply this year would likely force more high-cost operations to close, particularly in China.
