The spot price of iron ore continues to rise, and the news that Vale expects it will produce less of it in 2020 and 2021 bolsters the outlook for prices as well as the big miners.
In a regulatory filing filed on Wednesday (Thursday, AEDT), Vale expects to produce between 300 and 305 million tons of iron ore this year, compared to a previous target of between 310 and 330 million tons.
Vale also estimates that production will increase to 315 to 335 million tons in 2021.
While the revision and forecast disappointed Vale investors, it has bolstered the outlook for BHP, Rio and Fortescue and extended iron ore price rally.
Iron ore prices rose Wednesday, aided by concerns about supply shortages in the first quarter of 2021, and some futures prices on the Dalian Commodity Exchange closed at a seven-year high, sources told Fastmarkets MB.
The spot price for iron ore rose by $ 4. 16 or 3. 1 percent to $ 136. 29 to Fastmarkets.
The most heavily traded iron ore for delivery in January on China’s Dalian Commodity Exchange even rose 3. 5 percent to a record high of 934. 50 yuan ($ 142). 44) a ton before day trading ended at 934 yuan, Reuters reported.
Iron ore on the Singapore Stock Exchange jumped at 2. 4 percent to $ 130. 24 per ton to 0705 GMT, for a seventh session in a row.
RBC Capital Markets Tyler Broda said the iron ore market « we think will likely remain in a very tight position for at least six months. ». « .
« In our view, this is likely to cause expectations of both consensus iron ore prices and the market’s willingness to calculate those cash flows into stocks to rise. « .
Mr Broda said his model shows a 2 percent deficit in iron ore markets for 2021. « This follows a two-year deficit and has the potential to reduce port inventories in China to the level last seen in 2015 (and with consumption of about 750 million tons of finished steel in China compared to about 950 million tons currently). .
« With steel production in China growing by an astonishing 15 percent in October compared to the previous year, our second. A 3 percent increase for growth in China in 2021 also implies a dramatically slower consumption rate. And we’re 23 percent ahead of the consensus-based iron ore price forecast of $ 122 per ton. «
Exports from Australia and Brazil both missed earlier expectations, while China’s demand for steel has remained stable, according to Liberum Capital. In addition, the steel markets outside of China are also recovering.
In a communication dated Jan.. On December 31st, Macquarie analysts wrote: « An improvement in sentiment in our latest China Steel poll suggests that iron ore purchases are likely to spike by year-end.
« Traders led the sentiment rally while steel mills stayed positive and orders stayed higher. The outlook for most major demand sectors has improved, led by machinery, white goods, shipbuilding and a recovery in construction. «
In a 2021 outlook, Fitch expects iron ore prices to lag other metals, although they will remain « elevated » compared to recent levels. . Fitch sees iron ore averaging $ 100 per tonne in 2020, $ 90 per tonne in 2021, and $ 85 per tonne in 2022.
Speaking of investor advice, Macquarie said, « We remain positive on stocks exposed to iron ore due to strong cash flow returns and the momentum of earnings growth.
« FMG is our preferred large-cap exposure and we remain positive at both RIO and BHP. MIN is our central mid-cap pick and offers a unique leverage effect on both the iron ore price and the investment cycle. DRR offers low volatility to iron ore through its royalties derived from the production of BHP in mining area C.. «
The stock market is higher as large miners rally on strong iron ore prices. Fortescue stocks top $ 20. Macquarie buys US fund manager Waddell & Reed. Qantas sees breakeven point. $ A hits the 27-month high of US74. 20 ¢.
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Valley, Iron Ore
World News – AU – Iron ore up on Vale’s lower production estimate
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