Morgan Stanley (NYSE:MS) says China appears to be easing tightening measures to manage growth, and Vale SA (NYSE:VALE) responded Tuesday by rising over 6 percent in New York on the news.
Vale is the leading producer of iron ore in the world, and would benefit strongly if the assertion by Morgan Stanley proves to be true. It would of course help their competitors like BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RTP), along with those in the steel industry as well.
The problem seems to be there is no proof of the assertion, only speculation.
It would be a major change in policy, which seems to have barely started to be implemented, making it a stretch as to it being true. This hasn't stopped analysts and others from jumping on the bandwagon and acting as if this is already a story that has happened.
Vale is reportedly running its iron ore plants at full capacity in anticipation of the possibility, and the company director, Claudio Alves claims China is starting to replenish their steel stockpiles.
This may or may not mean they are changing policy, as rebuilding stockpiles could be from prior use which isn't scheduled for huge building projects going forward.
If this is found to be true, just about every precious metal and companies producing them would shoot up in price. For now, we should wait to see if this is really the case, as many assertions have been made but no proof offered.
Showing posts with label China Iron Ore. Show all posts
Showing posts with label China Iron Ore. Show all posts
Wednesday, July 21, 2010
Wednesday, June 9, 2010
BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RTP) Offering Monthly Iron Ore Prices to Chinese
BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RTP) are reportedly now offering steelmakers in China the option of monthly iron ore prices, in addition to the recent change to quarterly pricing.
"We will probably get a small proportion of contracted iron ore under the monthly pricing scheme, while the majority remains under the quarterly pricing scheme from Australian suppliers," said a senior official at Shagang, the fifth-largest Chinese steelmaker.
Chinese domestic steel demand is expected to grow at 15.8 percent in 2010, according to Macquarie, but drop to 8 percent in 2011, and 7.5 percent by 2012.
But now with China attacking the inflation related to its property market, it's hard to tell if those figures will remain the same, with some believing it will cause the sector to decline below former estimates.
"We will probably get a small proportion of contracted iron ore under the monthly pricing scheme, while the majority remains under the quarterly pricing scheme from Australian suppliers," said a senior official at Shagang, the fifth-largest Chinese steelmaker.
Chinese domestic steel demand is expected to grow at 15.8 percent in 2010, according to Macquarie, but drop to 8 percent in 2011, and 7.5 percent by 2012.
But now with China attacking the inflation related to its property market, it's hard to tell if those figures will remain the same, with some believing it will cause the sector to decline below former estimates.
Tuesday, May 25, 2010
Vale (NYSE:VALE), BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RTP) and Changing Iron Ore Story
The iron ore story is of course tied into the steel story, and they're joined at the hip. The move by Vale (NYSE:VALE), BHP Billiton (NYSE:BHP) to Rio Tinto (NYSE:RTP) change the way they price iron ore as far as on a quarterly basis versus the old way of annual pricing, has shook up the industry, and China along with it, as iron ore prices skyrocketed as a result.
Frustrated over lack of desired results of negotiating prices, China has taken several steps to lower their dependence on iron ore from these three major providers.
The two major steps are to import iron ore from other countries like Iran, and to increase domestic iron ore production. In April alone, domestic iron ore production increased 50 88 million tons, a 45 percent increase over April of 2009, and a 10.5 percent increase over March.
Add to that the probable and expected decrease in raw materials in China as a consequence of rising inflation, and you have a different iron ore demand picture than was recently portrayed.
China consumes the most iron ore, accounting for 54 percent of all world consumption, and also supplies 40 percent of all iron ore in the world, leading both categories.
Even so, at this time the three major iron ore suppliers, BHP Billiton, Vale and Rio Tinto have no intention of cutting back on expansion plans or capacity, meaning they believe the demand will exceed China's ability to meet it, and they'll have to pay top dollar to attain enough iron ore to meet their needs.
Yet there is also the European sovereign debt crisis hanging over the global economy, which could significantly cut back on iron ore and steel demand as austerity measures are implemented in the region.
The conclusion is the iron ore picture isn't near as clear as it was just recently, as China is the major part of the story, and how China goes, so will go the iron ore narrative.
For the reasons stated above, iron ore prices have already dropped 20 percent since the introduction of the quarterly pricing model, and it remains to be seen how much further they drop before they find a bottom.
For the steel industry in general, they've rebounded nicely today as far as stock prices go, as the drop in iron ore prices will expand the margins, and allow them to possibly drop prices to generate more revenue and earnings.
Frustrated over lack of desired results of negotiating prices, China has taken several steps to lower their dependence on iron ore from these three major providers.
The two major steps are to import iron ore from other countries like Iran, and to increase domestic iron ore production. In April alone, domestic iron ore production increased 50 88 million tons, a 45 percent increase over April of 2009, and a 10.5 percent increase over March.
Add to that the probable and expected decrease in raw materials in China as a consequence of rising inflation, and you have a different iron ore demand picture than was recently portrayed.
China consumes the most iron ore, accounting for 54 percent of all world consumption, and also supplies 40 percent of all iron ore in the world, leading both categories.
Even so, at this time the three major iron ore suppliers, BHP Billiton, Vale and Rio Tinto have no intention of cutting back on expansion plans or capacity, meaning they believe the demand will exceed China's ability to meet it, and they'll have to pay top dollar to attain enough iron ore to meet their needs.
Yet there is also the European sovereign debt crisis hanging over the global economy, which could significantly cut back on iron ore and steel demand as austerity measures are implemented in the region.
The conclusion is the iron ore picture isn't near as clear as it was just recently, as China is the major part of the story, and how China goes, so will go the iron ore narrative.
For the reasons stated above, iron ore prices have already dropped 20 percent since the introduction of the quarterly pricing model, and it remains to be seen how much further they drop before they find a bottom.
For the steel industry in general, they've rebounded nicely today as far as stock prices go, as the drop in iron ore prices will expand the margins, and allow them to possibly drop prices to generate more revenue and earnings.
Thursday, May 13, 2010
BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RTP), Vale (NYSE:VALE) and Iron Ore Demand from China
As China implements measures to cool off its economy, iron ore producers like BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RTP) and Vale (NYSE:VALE) are starting to get concerned on how it will impact the demand for iron ore from them.
Many raw materials companies have the same concerns, as many have been counting on increasing demand from China to help them through these slow economic times.
Just last month iron ore prices stood at two-year highs of $184.80 a ton, and now has dropped to $169.5 a ton in that short time.
The major element going forward is whether or not decreasing supply from India because of the monsoon season will offset the lower demand in the market.
Consequently, depending on which you believe to be the case, iron ore prices have been projected to drop as low as $150 a ton or rise to over $200 a ton by the summer.
Many raw materials companies have the same concerns, as many have been counting on increasing demand from China to help them through these slow economic times.
Just last month iron ore prices stood at two-year highs of $184.80 a ton, and now has dropped to $169.5 a ton in that short time.
The major element going forward is whether or not decreasing supply from India because of the monsoon season will offset the lower demand in the market.
Consequently, depending on which you believe to be the case, iron ore prices have been projected to drop as low as $150 a ton or rise to over $200 a ton by the summer.
Tuesday, May 11, 2010
US Steel (NYSE:X), AK Steel (NYSE:AKS), ArcelorMittal SA (NYSE:MT) Fall on China Tightening
A number of companies in the commodity and/or raw materials sector have been under pressure lately, and that's true in the steel industry, as US Steel (NYSE:X), AK Steel (NYSE:AKS), ArcelorMittal SA (NYSE:MT) are down so far in today's trading session because of China's battle against a housing market bubble bursting, and so they're tightening things up to better manage the situation, which has generated uncertainty as to how that will affect the demand for building materials.
This shouldn't dramatically impact the steel industry, but it could cause some of their projections to fall short, depending on how much China may cut back on imports of iron ore and steel, among other materials.
All companies and countries relying on China are getting nervous over how deeply China will have to cut back in order to bring things to a better balance.
This shouldn't dramatically impact the steel industry, but it could cause some of their projections to fall short, depending on how much China may cut back on imports of iron ore and steel, among other materials.
All companies and countries relying on China are getting nervous over how deeply China will have to cut back in order to bring things to a better balance.
Wednesday, May 5, 2010
Vale (NYSE:VALE) Profits Up 18 Percent
Vale SA (SAO:Vale5) (NYSE:VALE) had earnings in the first quarter increase by 18 percent as demand for iron ore surged from steelmakers.
Revenue for the quarter grew from $5.42 billion last year to $6.85 billion in this quarter, while profits rose to $1.6 billion, or 30 cents a share, from $1.36 billion, or 26 cents a share the same quarter last year.
The gains are directly related to increasing iron ore demand and the inability to supply all of it in the world, which allows for higher prices and better profits.
Most demand is coming from China, and iron ore needs will grow at an estimated 10 percent there in 2010. Approximately 57 percent of iron ore and pellet shipments of Vale go to China.
Vale's major competitors are Rio Tinto Group (ASX:RIO) (LON:RIO) and BHP Billiton Ltd. (ASX:BHP) (NYSE:BHP).
Revenue for the quarter grew from $5.42 billion last year to $6.85 billion in this quarter, while profits rose to $1.6 billion, or 30 cents a share, from $1.36 billion, or 26 cents a share the same quarter last year.
The gains are directly related to increasing iron ore demand and the inability to supply all of it in the world, which allows for higher prices and better profits.
Most demand is coming from China, and iron ore needs will grow at an estimated 10 percent there in 2010. Approximately 57 percent of iron ore and pellet shipments of Vale go to China.
Vale's major competitors are Rio Tinto Group (ASX:RIO) (LON:RIO) and BHP Billiton Ltd. (ASX:BHP) (NYSE:BHP).
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