Vale CEO sees iron ore prices at USD 130 to USD 160

Mr Roger Agnelli CEO of Brazilian mining giant Vale said on Monday that he expects iron ore prices to average between USD 130 per tonne to USD 160 per tonne this year and expects a similar range in 2011 Agnelli told reporters at a news conference in New York that the range depends on issues like freight costs and quality.

Source: Reuters

Karnataka ore ban hits biz of New Mangalore Port

The Karnataka government’s ban on mining and movement of iron ore in the state has impacted the business of New Mangalore Port Trust (NMPT). Along with Tadiri and Billikere, NMPT ships close to a half of Karnataka’s 30 million tonne of iron ore. Tadiri and Billikere are minor ports and normally remain shut during monsoon.
A recent report on the port sector by broking house Motilal Oswal notes that while other ports, notably Ennore and Kolkata, reported a healthy 25%-plus year-on-year growth in cargo in September, Kandla and NMPT were the laggards, with the latter being the worst performer. NMPT accounts for 5% of the country’s cargo composition. The report says iron ore shipments from India were 4.5 million tonne in September 2010 compared to 5.2 million tonne in September 2009.

Global wheat output to hit surplus next year

Global wheat production will return to surplus next year, but not by enough to refill inventories by more than a fraction, Macquarie has said. The Australia based banker also forecasted that Chicago prices will remain above $6 a bushel for at least two years.
The bank forecast a jump of more than 5% in wheat production in 2011-12, the sowings for which have begun in northern hemisphere countries, as growers raise plantings to capitalise on firmer prices.
"European Union, US and Canadian farmers are expected to expand wheat plantings at the expense of other crops," Macquarie said.

Congested Asian ports struggle to sate Chinese demand

Australia, India and Indonesia are under the gun to expand port capacity so exporters can cash in on China's commodities boom or face losing billions of dollars in business to other markets. China, already the top iron ore importer and coal user, is expected to consume even greater amounts of commodities over the next few years to help fuel the rapid growth of the world's second largest economy.
But major congestion at ports from Newcastle to Paradip to Balikpapan could force the world's most populous country to turn to imports from suppliers further afield, such as the United States and Canada, which don't have the same bottlenecks.
"It seems that (Asia Pacific) port capacity is constantly running behind actual demand," said Klaus Nyborg, chief executive of Hong Kong-based dry bulk shipping firm Pacific Basin, one of Asia's biggest small-sized shipowners.

WEEK41 - Dry Cargo Market “Highlights” – 08-October-2010 - 15-October-2010

Yet another week passed by with China being the drive force of the main size segment the Capes. All indices went down during this week with Capes still moving positively and the reason for this is the continuing growth in demand for iron ore imported in China.  Yes that’s no news one would say and that is absolutely right. We are not happy to be forced to repeat the same old song every week, but this status quo could also be assuring depending on how you might want to see it. Further in this report we will explain what we feel about China and what we may call “welcome to the comfort zone”…
To get a peek at how this week did not have the same number as period and timecharter fixtures in the Cape sector, as we have more or less 12, but all period and T/C fixtures for the first 15 days of October have reached 38 in total, one more than the 37 we had recorded for last September. This is surely a sample of the increased demand and the heating up of the Capesize market that managed to raise the average daily performance to a level over $40,000 dollars per day. We shall see in detail how the daily earnings of all sizes of ships moved this week, however briefly similar to last week the Capes is once again this weeks big winner with all the other smaller sizes and especially the Panamax size segment performing the worst.

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WEEK 41 DRY BULK ANALYSIS

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.

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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.

Rio Tinto CEO says iron ore merger process 'more challenging'

Anglo-Australian miners Rio Tinto and BHP Billiton are continuing talks with regulators over their proposed $116 billion Pilbara production joint venture but high global iron ore prices is making the process "more challenging," Rio Tinto CEO Tom Albanese said Thursday. "We've seen higher iron ore pricing as good for our business but it has been making the regulator picture quite challenging," Albanese said on CNBC Thursday when asked how the merger was progressing. "We said from the beginning, we respect the regulatory process. We are continuing our discussion with the regulators, but it is more challenging than it was a couple of months ago." Albanese was making his first public statement since details of an informal teleconference between Rio Tinto board members were leaked to an Australian newspaper on Monday, at which there was reportedly discussion about the best way to inform BHP Billiton of the company's intention to bow out of the joint venture agreement. Rio Tinto issued a three paragraph statement Tuesday in response to the report confirming a board meeting had been held at which the joint venture was among a "range of issues" discussed, but said the board had not made any final decisions relating to the proposal. It has also launched an internal probe into the source of the leak, the Sydney Morning Herald, which broke the story, reported Thursday.

Chinese iron ore concentrates buyers in wait and see mode

It is reported that the iron ore concentrates in Hanxing saw mix offers during the national holiday. Now holiday just passed and iron ore concentrates price quotations in some area are evidently higher than those before the holiday. Affected by increasing market activities in nearby areas, the iron ore concentrates prices in Hanxing saw rebound and inquiries increased, yet with normal transaction.

Rio Tinto CEO says iron ore merger process 'more challenging'

Anglo-Australian miners Rio Tinto and BHP Billiton are continuing talks with regulators over their proposed $116 billion Pilbara production joint venture but high global iron ore prices is making the process "more challenging," Rio Tinto CEO Tom Albanese said Thursday. "We've seen higher iron ore pricing as good for our business but it has been making the regulator picture quite challenging," Albanese said on CNBC Thursday when asked how the merger was progressing. "We said from the beginning, we respect the regulatory process. We are continuing our discussion with the regulators, but it is more challenging than it was a couple of months ago."

Global iron ore prices decline as China consumes less steel

The value of Australian iron ore assets has sunk by half over the past quarter, led by a decline in prices of the commodity. “We had valued the asset at $230 million, but now I don’t think we should pay more than half of that,” said a domestic mining company bidding for one of these assets. Chinese policies — phasing out of stimulus packages, hemming of the real estate sector and closing of obsolete units — are being blamed for this.

Iron Ore-Index hits 7-week top as China buyers return

Iron ore spot prices extended gains on Monday, lifting the benchmark index to its highest in seven weeks, fuelled by tighter supplies and revival in Chinese demand. Market watchers had expected Chinese buyers to return after a week-long public holiday that ended on Thursday, with demand from the world's biggest iron ore importer seen revving up as many steel mills restart production after state-imposed curbs. Offers for Indian ore with 63-63.5 percent iron content climbed on Monday to $155-$157 a tonne, cost and freight delivered to China, from $151-$153 a tonne on Friday, according to Chinese industry consultant Mysteel. "Chinese steel mills have started to replenish stocks after the week-long break," said an iron ore trader in China's eastern Shandong province.

Rio Tinto sticks with quarterly pricing

Despite angst from the Chinese steel industry and radical proposals to move toward spot iron ore pricing, Rio Tinto remains content with the new system of quarterly supply contracts. RTP will continue to reprice its supply arrangements on a quarterly basis to ensure some relatively long-term stability in the steel industry, which depends on steady ore pricing to plan its operations.

Indonesia May Import 300,000 Tons of Rice, First Bulk Purchase Since 2007

Indonesia, the world’s third-largest rice producer, may have to import 300,000 metric tons of the grain, the first bulk purchase since 2007, to meet an expected shortfall in government supplies, Bulog executives said. “Now our stockpiles are about 1.2 million metric tons and we should have 1.5 million tons in December,” Sutarto Alimoeso, president director at the state food company, told reporters in Jakarta today. “We are prepared to buy 300,000 tons of rice from Thailand and Vietnam.”

Worldsteel Short Range Outlook

The World Steel Association (worldsteel) today released its October 2010 short range outlook (SRO) for 2010 and 2011. worldsteel forecasts that apparent steel use will increase by 13.1% to 1,272 mmt in 2010 after contracting by - 6.6% in 2009. This represents an improvement of 35 mmt over the April SRO for 2010 exceeding the pre-crisis peak of 1,222 mmt in 2007. In 2011, it is forecast that world steel demand will grow by 5.3% to reach a record 1,340 mmt.
The worldsteel Economics Committee met in Rio de Janeiro in September 2010 to discuss the October 2010 SRO.

Chinese domestic steel prices in October may be worse off

On the last day of September, Shanghai Futures Exchange witnessed a mild rise of steel futures. However, it has not changed the downward trend of Chinese steel market.

According to industry insiders, the market is now facing quite a lot of negative news and uncertain policies.
So if there is anything to be sure, that is that steel price will not go back up soon. Basic conditions are against sharp price rise after the National Day Holiday
Judging from the storage of steel products in the recent days, demand in China’s domestic steel market is obviously not strong enough to bring about any dramatic change. Until September 25, the national storage volume of rebar has increased by 0.16%, and that of wire rod has increased by 4.59%, which has ended previous shrinking of construction steel storage. The rising storage will surely shock the market quite much.
As pointed out by analysis, demand is largely replaced by wait and see during the steel price is falling. Moreover, the 11 day long National Day Holiday also affects the behavior of traders and steel factory to some extent.
Therefore, it is quite possible that the sales level of October will not reach that of September.

Source: Steel Guru

BRIC nations to fuel Aluminium demand by 13%

Chinese demand for aluminium will keep up the global consumption of the metal, which is poised to grow at 13% in the current year. Higher consumption will come mainly from the automobile industry and the electronic equipments industry in the country. The Chinese auto sector has showed robust growth over past several months with heavy truck and trailers taking the largest pie of the total consumption.

WEEK39 - Dry Cargo Market “Highlights” – 24-September-2010 - 01-October-2010

This week was a “weird” week with no clear direction given from the Baltic Indices. We can claim that our estimate of last week was practically proven right. We had given during week 38 an indication that the upcoming holidays of China in week40 and  the Mid-Autumn Festival of 1st Oct 7th Oct 2010 would cause a pre-holiday advance activity just strong enough to clear the outstanding orders that would secure that there will not be a shortage of incoming cargoes during this holiday period. Panamax vessels are the size segment that was affected the most during this week and the Supramaxes followed, with the Handymaxes also in the red. The capes survived and performed positively with a 9.55% increase this week and that was enough to counterweight the losses of the other 3 smaller size sectors, ultimately giving the BDI the smallest week on week percentage rise of just 0.33%, an increase of just 8 points. We expect the same trends to continue over the holiday week though.
In the table on the left, we see the level of Chinese Imports of Iron/Ore for the period of 2006 until Sep 2010. It is clearly evident that we are reaching the lowest levels since Jan 2009, when the markets were struggling to recover from the post Oct 2008 financial markets crash that lead to a near standstill of world trade. The total imports of the essential raw material for the production of steel, iron/ore for China in 2009 was 628 mil tones a number about 30% higher than the total imports for 2008 that had totaled 444 mil tones a number again 14% higher than the previous figures of 2007 that were amounting to 383 mil tones. For 2010 the numbers so far present a 5% reduction compared to 2009, with the 4th quarter expected to continue at a similar pace as the whole of 2010 had progressed, and the total estimate for this year is that imports of iron/ore will gross to about 600 mil tones.

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WEEK39 DRY BULK ANALYSIS

India: Steel prices and demand is set to rise in 2011

Global steel prices and demand is set to rise in 2011. Demand for steel is set to rise 13.1 percent to 1.27 billion tonnes this year, higher than an earlier forecast of 8.4 percent growth. Strong demand for steel is expected in China, India, Brazil, Turkey, Saudi Arabia ,Qatar ,Europe and other developed economies due to restocking and government stimulus packages in addition to continued robust demand.

China's not a superpower in the commodities markets

China is a dominant player in global trade, but it’s not the superpower in the commodities market it appears to be. After the maritime dispute between China and Japan in the East China Sea, China may have played some cards in global trade to persuade Japan to release the captain of the fishing vessel sailing in disputed waters.
Speculation emerged last week that China had halted or restricted shipments of rare-earth resources to Japan.
And earlier this week, China hiked inspections for Japanese exports and imports and raised the anti-dumping duty on U.S. chicken products.
“China has discovered that being an important customer gives one some leverage,” said Ned Schmidt, editor of the Agri-Food Value View Report, because when it comes to commodity imports, “China has the check book. No other market can replace Chinese demand for commodities.”