BHP Billiton and Rio Tinto Terminate the Iron Ore Production Joint Venture

BHP Billiton and Rio Tinto signed core principles to establish a production joint venture covering the entirety of both companies’ Western Australian Iron Ore assets.  This resulted in the signing of definitive agreements on 5 December 2009. The completion of these agreements was subject to a number of conditions, including regulatory approvals.
Since the agreement was signed it has become increasingly apparent that regulatory approvals of the joint venture are unlikely to be achieved.  Consequently, BHP Billiton and Rio Tinto have reluctantly agreed to dissolve the proposed joint venture.

Iron Ore-Index near 5-month top, up for 8th straight session

Iron ore prices rose for an eight consecutive session on Friday to their highest in nearly five months, marking their longest winning streak since March on strong Chinese demand. Chinese steelmakers have resumed buying supplies as government-enforced curbs on production eased and mills stockpile iron ore ahead of winter. But the surge in iron ore prices coincides with falling steel rebar futures in Shanghai SRBc8, suggesting market players may soon put the brakes on the iron ore rally given the hazy outlook for steel demand, with China bent on taming its red-hot property market. "The recent rises in iron ore prices, we think, will be short lived," said Judy Zhu, commodity analyst at Standard Chartered Bank. "The price gains have been driven by Chinese mills' stockpiling, but I do not expect them to stockpile a huge amount of it when domestic steel demand remains so-so." Industry data showed crude steel output in China, the world's biggest producer, fell to about 48.54 million tonnes in September from 51.64 million tonnes in August after Beijing curbed production to meet a year-end energy efficiency target.

Currency wars to propel Commodity Super Cycle

While the United States remains the world's No.1 economy, it is increasingly feeling the heat of the Chinese dragon breathing down its neck, writes Gary Dorsch, editor of Global Money Trends. At the beginning of the twenty-first century, the US economy was eight times larger than China's – a decade later the figure was down to three times. China's $5 trillion economy has eclipsed Japan, Germany, France and Britain, to become the second-biggest, after three decades of blistering growth, and is now within reach of overtaking the US within 10 years. With China's economic growth rate at 10% and the US economy struggling at 1.5% growth – this long-term prediction doesn't sound that far-fetched.
China, with 10 times Japan's population, has long been expected to catch up with its neighbor. But the global crisis and Japan's sluggish growth brought that point forward by many years. China has emerged to become the world's largest exporter, overtaking Germany, which held the title since 2002. Factories employing low-paid workers to assemble iPods, computers, shoes, and toys are leading the boom. China has also passed the US as the world's largest auto market and producer. Two decades ago, a car industry barely existed in China.

Fortescue Metals Iron Ore Shipments Exceed Guidance

Fortescue Metals Group Ltd., Australia’s third-biggest producer of iron ore, said first- quarter shipments rose a better-than-expected 6 percent as production increased. The company’s share of shipments was 10.1 million metric tons in the three months ended June 30, from 9.5 million tons a year ago, Perth-based Fortescue said today in a statement. It had forecast 9.5 million tons.
Fortescue said this week it had agreed a $2.04 billion loan to refinance debt in order to pursue expansions. Production will continue to operate at an annual rate of 40 million tons until February, when it will rise to 55 million tons, the company said.

Q+A-What's next for troubled RIO-BHP iron ore JV?

A $116 billion iron ore joint venture between Rio Tinto and BHP Billiton has suffered a blow after German regulators said they would block it, foreshadowing a rejection by the European Union Combining their vast Australian iron ore mining operations would surpass Brazil's Vale in size, producing a combined 385 million tonnes of ore initially and aimed at saving $10 billion in costs.
But Germany's competition watchdog said it would prohibit the deal and sources said regulators from the European Union, deemed the biggest hurdle to the venture, are set to say the merger could hurt competition.
A leak of Rio Tinto boardroom discussions earlier this month indicated the company was determined to walk away from the venture.

Cargill Profit Surges 68 Percent As Volatile Grain Markets Boost Trading

Cargill, Inc., said quarterly profit surged 68 percent, to $883 million, helped by volatile grain markets that boosted trading revenue for one of the world’s largest agricultural companies Results in Cargill’s origination and processing business, which includes commodity trading, rose “significantly” in the quarter, the Minneapolis-based company said in a statement today. That reflected “renewed market volatility and changes in trade flows (that) created opportunities for trading and for serving customers' price risk and raw material needs,” Cargill said.

BHP-Rio antitrust report expected soon

There was no surprise for Rio Tinto and BHP Billiton in a report saying the European Commission would soon announce the result of its antitrust investigation into their proposed $US116 billion ($A118 billion) iron ore production joint venture in the Pilbara.

The joint-venture proposal has a December 31 deadline from the companies and has been under investigation by the commission since being announced in June last year.
Both companies have also indicated previously that they expect to hear back from the regulator in the second (calendar) half of this year. Even so, BusinessDay reported last week that Rio's board had already begun planning the best way to announce that the joint venture would not proceed due to unacceptable conditions likely to be imposed by antitrust regulators.

China iron ore concentrates price rises again in few regions

It is reported that iron ore concentrate prices rises again. 1. In Liaoning.Iron ore concentrates price went up by around CNY 30 per tonne during the first few days of the national holiday. But it became steady in the last few days of the holiday with enquires increased and good transaction. Local steel mills sudden purchases increase promoted the market activity, and miners were busy with the production and sales. Recently, local steel mills increased the purchase price by CNY 30 per tonne and today the market also increase by CNY 20 per tonne to CNY 30 per tonne.

Shandong to invest RMB 100 bln in coal industry by end of 2015

The Coal Industry Bureau of Shandong Province announced plan to inject more than RMB 100 billion into coal industry by the end of the 12th five-year plan starting from 2010 to 2015, sources reported.
In the period, the province hopes to kick off construction on 16 collieries with a designed annual output capacity totaling 12.6 million tons and to put 18 mines into operation to add capacity of 16.65 million tons.
The total capacity of Shandong is expected to maintain around 150 million tons of coal in the next 20 years.
However, Wang Liting, deputy director of the coal industry bureau, said that the province has 935 coal developers, an amount 18.7% more than the planned figure in the province, adding that Shandong will wash out backward capacity in the future to optimize the coal industrial structure.

Source: China Knowledge

India's sugar supply to ease global prices

Peaked sugar global market is expected to be pacified with the supply of sugar from India. Sugar production in India is projected to touch 25.5 million tons thanks to favorable monsoon rains.
The industry opined that the country could export three million tons of surplus sugar in the current marketing year.
With an expected sugar output of 25.5 million tons and the carryover stocks of 5.8 million will facilitate to ship around three million tons of surplus sugar this year, Indian Sugar Mills Association Director General Abinash Verma was quoted by Dow Jones Newswires.

WEEK40 - Dry Cargo Market “Highlights” – 01-October-2010 - 08-October-2010

We were a bit hasty to mention last week as a peculiar and weird one… well this current week was definitely the “weird week”, as our estimate and many more shipping analysts forecast and expectation expressed last week that this current week’s festive mid-autumn festival holidays would have surely caused a slack in the Cape activity and subsequently would bring Capes to lower freight rates fell through…. It seems that the opposite happened and the Cape market shot up, with a massive near 20% increase in the index and a 19% increase in actual daily earnings!

It came as a pleasant surprise that the Capes (ships 3 times the length of a normal soccer field) were in good demand and attracted many Timecharter and period fixtures, about 28 a record number. We can also comment and point out that on Thursday the 7th Oct 2010 9 T/C and Period fixtures for Capes were recorded, a record number that we had not seen for a long time.

You may download the complete report from our WEBSERVER:

WEEK 40 DRY BULK ANALYSIS

Rio Tinto Says China Shows 'Positive' Signs of Growth as Industries Expand

Rio Tinto Group, which gets almost a quarter of its revenue from China, said the East Asian country has begun to show “positive” signs of growth again as its manufacturing and construction industries recover. “Two months ago there were jitters in financial markets about the sustainability of Chinese growth,” Vivek Tulpule, chief economist for the world’s third-biggest mining company, said today at a briefing in Melbourne. “Since then signs have turned more positive. China is surprising us again on the upside.’’
While China’s economic growth cooled to an annual 10.3 percent in the second quarter from 11.9 percent in the first, manufacturing, trade and construction are now rebounding, Tulpule said. China last year became Rio’s biggest customer, surpassing North America and Europe. The London-based company is the world’s second-largest exporter of iron ore.

Baosteel's net profit for Jan-Sept expected to rise by 170-190 percent

Leading Chinese steelmaker Baosteel estimates that in the first three quarters of the current year its total net profit will register an increase of 170-190 percent on year-on-year basis. Detailed data will be made available in the company's Q3 report, which has not been issued yet.
According to its report for the first half of 2010, Baosteel's net profit for the first six months of the current year was 140-160 percent higher compared to the same period of the previous year

Source: SteelOrbis

Scrap import offers have remained stable in Turkey

The Turkish market has been quieter than expected in the post-Eid period. There has been no visible bounce in demand. Transactions have been sporadic. This has been partially the result of on local steelworks actively sourcing material during the religious festival. Mill input costs edge higher in China
Provincial billet and scrap values strengthed in early September trading. The upward movement has been attributed to the government’s decision to scale back the country’s overcapacity. Outdated steel facilities have been shutdown. Inadvertently the domestic supply of billet has been tightened. The majors have recently cut their scrap purchasing prices and temporarily suspended purchases.
CIS semis producers struggle to sell material
Russian and Ukrainian metallurgical plants have witnessed little evidence of an autumn recovery. Export offers were lifted under the premise of stronger trading activity. However, many long established clients have found the latest offers too expensive. Re-stocking activity has been limited. Expectations are now pointing towards a price correction in October.

Source: MEPS

China found 900 mineral locations in past 12 years

During the past 12 years, Chinese scientists have discovered more than 900 locations containing mineral deposits which are estimated to hold 5 billion tons of iron ore, as well as a vast array of other resources, the country's geological authorities said Saturday. The large number of discoveries, including newly found reserves of iron and copper ores, coal, gas, and other types of raw minerals, came after a major geological mapping was launched in 1999, officials with the China Geological Survey (CGS) said at a press conference held in Beijing Saturday.
The CGS is a government-owned non-profit entity directly under the Ministry of Land and Resources.
Among the discoveries, 152 locations were identified as holding huge amounts of deposits. These findings would pave the way for future development and reduce the risks for commercial prospecting for resources, a statement from the CGS website said.