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Friday, 10 October 2008
China Mills Slowing Iron Ore Demand, Mt. Gibson Says
Steel mills in China, the world’s biggest makers, are reducing demand for iron ore and asking miners to postpone deliveries because of tightening credit facilities, said Mt. Gibson Iron Ltd., an Australian producer. PDF
China Mills Slowing Iron Ore Demand, Mt. Gibson Says
By Rebecca Keenan 9 October 2008
(Bloomberg) – Steel mills in China, the world’s biggest makers, are reducing demand for iron ore and asking miners to postpone deliveries because of tightening credit facilities, said Mt. Gibson Iron Ltd., an Australian producer.
“Customer and iron ore sector analysis indicates a slowdown in demand for iron ore in China due to current economic uncertainty and the tightening of credit facilities,” the Perth- based company said today in a statement to the Australian stock exchange. Mt. Gibson said it received requests to delay shipments until the second quarter of the financial year.
Chinese mills have slowed production, sending cash iron ore prices down 17 percent in the last week of September. The global financial crisis has locked corporates out of capital markets after financial companies booked more than $592 billion in writedowns and credit-market losses since last year.
“The rest of the world is cutting production and that means they don’t need China’s exports, so China’s production in steel is going to slow,” Glyn Lawcock, head of resources research at UBS AG, said by phone from Sydney. “That puts the pressure back upstream on raw material suppliers like the iron ore producers and coking coal.”
Mt. Gibson fell by as much as 25 percent to 87 cents on the Australian stock exchange. That was its biggest fall since Jan. 17 2002. It was trading at 88 cents at 10:18 a.m. Sydney time.
BHP, Rio
Mt. Gibson said it has no obligation to delay deliveries as customers are contractually bound to buy the ore. The company, dwarfed in production by bigger Australian producers Rio Tinto Group and BHP Billiton Ltd., shipped 1.432 million metric tons of ore in the three months to Sept. 30.
BHP spokeswoman Samantha Evans wasn’t immediately available for comment, and neither was Rio spokesman Gervase Greene.
“The spot price is now down at the benchmark price and this is the first sign of good quality iron ore being affected,” UBS’ Lawcock said. He expects contract prices to fall 15 percent next year, the first decline in seven years.
Cash prices of iron ore imported by China fell 17 percent to 1,000 yuan ($146.76)) a metric ton in the week ending Sept. 29 at Beilun port, according to data from Beijing Antaike Information Development Co. That’s the biggest decline since it started compiling data in June 2006.
Excess Supply
China has excess supply of ore with stocks of about 70 million tons at its 20 largest ports, Lorentzen & Stemoco AS analyst Nicolai Hansteen said in a report yesterday.
Stockpiles could start falling in the last quarter of 2008, Rio Tinto’s Chief Executive Officer Tom Albanese said Oct. 2. Rio plans to sell 15 million tons of iron ore into the spot market this year and delivered 10 million tons of that in the first half.
China’s biggest steelmakers including Baosteel Group Corp. and Jiangsu Shagang Group Co. are considering output cuts, the Beijing Times reported yesterday, citing a report from the China Iron & Steel Association. That may slow the use of iron ore stockpiles and curb demand for new imports.
China’s steel demand rose 6 percent in August, down from the 13 percent gain in the first seven months from a year ago, the association said in September.
The weaker demand for iron ore has cut the cost of shipping and led to a surplus of vessels for hire. The Baltic Dry Index, a measure of shipping costs for commodities, fell to its lowest since June 2006 yesterday.
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China Mills Slowing Iron Ore Demand, Mt. Gibson Says
By Rebecca Keenan
9 October 2008
(Bloomberg) – Steel mills in China, the world’s biggest makers, are reducing demand for iron ore and asking miners to postpone deliveries because of tightening credit facilities, said Mt. Gibson Iron Ltd., an Australian producer.
“Customer and iron ore sector analysis indicates a slowdown in demand for iron ore in China due to current economic uncertainty and the tightening of credit facilities,” the Perth- based company said today in a statement to the Australian stock exchange. Mt. Gibson said it received requests to delay shipments until the second quarter of the financial year.
Chinese mills have slowed production, sending cash iron ore prices down 17 percent in the last week of September. The global financial crisis has locked corporates out of capital markets after financial companies booked more than $592 billion in writedowns and credit-market losses since last year.
“The rest of the world is cutting production and that means they don’t need China’s exports, so China’s production in steel is going to slow,” Glyn Lawcock, head of resources research at UBS AG, said by phone from Sydney. “That puts the pressure back upstream on raw material suppliers like the iron ore producers and coking coal.”
Mt. Gibson fell by as much as 25 percent to 87 cents on the Australian stock exchange. That was its biggest fall since Jan. 17 2002. It was trading at 88 cents at 10:18 a.m. Sydney time.
BHP, Rio
Mt. Gibson said it has no obligation to delay deliveries as customers are contractually bound to buy the ore. The company, dwarfed in production by bigger Australian producers Rio Tinto Group and BHP Billiton Ltd., shipped 1.432 million metric tons of ore in the three months to Sept. 30.
BHP spokeswoman Samantha Evans wasn’t immediately available for comment, and neither was Rio spokesman Gervase Greene.
“The spot price is now down at the benchmark price and this is the first sign of good quality iron ore being affected,” UBS’ Lawcock said. He expects contract prices to fall 15 percent next year, the first decline in seven years.
Cash prices of iron ore imported by China fell 17 percent to 1,000 yuan ($146.76)) a metric ton in the week ending Sept. 29 at Beilun port, according to data from Beijing Antaike Information Development Co. That’s the biggest decline since it started compiling data in June 2006.
Excess Supply
China has excess supply of ore with stocks of about 70 million tons at its 20 largest ports, Lorentzen & Stemoco AS analyst Nicolai Hansteen said in a report yesterday.
Stockpiles could start falling in the last quarter of 2008, Rio Tinto’s Chief Executive Officer Tom Albanese said Oct. 2. Rio plans to sell 15 million tons of iron ore into the spot market this year and delivered 10 million tons of that in the first half.
China’s biggest steelmakers including Baosteel Group Corp. and Jiangsu Shagang Group Co. are considering output cuts, the Beijing Times reported yesterday, citing a report from the China Iron & Steel Association. That may slow the use of iron ore stockpiles and curb demand for new imports.
China’s steel demand rose 6 percent in August, down from the 13 percent gain in the first seven months from a year ago, the association said in September.
The weaker demand for iron ore has cut the cost of shipping and led to a surplus of vessels for hire. The Baltic Dry Index, a measure of shipping costs for commodities, fell to its lowest since June 2006 yesterday.
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