BUSINESS FORECASTING

Rival MinRES contradicts FMG on iron discounts

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Original article by Peter Ker
The Australian Financial Review – Page: 14 : 1-Feb-18

Mineral Resources has advised that it stockpiled about 500,000 tonnes of iron ore fines during the December 2017 quarter, in response to the ongoing price discount for lower-grade ore. In contrast to Fortescue Metals Group, Mineral Resources expects the price discount to be sustained for some time. Mineral Resources also sought to counter the price discount by changing its iron ore blend in a bid to deliver supply buyers with a higher-quality product. Fortescue also intends to increase the average grade of its iron ore.

CORPORATES
MINERAL RESOURCES LIMITED – ASX MIN, FORTESCUE METALS GROUP LIMITED – ASX FMG, INDEPENDENCE GROUP NL – ASX IGO

Cycle turning on discounts, says Fortescue

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Original article by Peter Ker
The Australian Financial Review – Page: 17 : 31-Jan-18

Fortescue Metals Group CEO Nev Power expects the price gap between lower-grade iron ore and the benchmark price to narrow in coming months. He says the December 2017 quarter is likely to represent the low-point for the price discount. Fortescue sold its iron ore at just 66 per cent of the benchmark price during the quarter, compared with 86-88 per cent between 2014 and 2016. Meanwhile, Citigroup has forecast that Fortescue will reduce its net debt to $US2.4bn by mid-2018, after it rose to $US3.3bn at the end of 2017.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, CITIGROUP PTY LTD, SHAW AND PARTNERS LIMITED, CLEVELAND-CLIFFS INCORPORATED, RIO TINTO LIMITED – ASX RIO, VALE SA

Steel mills put the sizzle back into Fortescue

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Original article by Peter Ker
The Australian Financial Review – Page: 17 : 29-Jan-18

The price discount between benchmark iron ore and lower-grade iron ore has widened in recent months, amid the Chinese Government’s push to reduce air pollution. However, Fortescue Metals Group CEO Nev Power believes that the price gap is not sustainable. A strong rise in steel prices contributed to the increase in the price discount, although the price of lower-grade iron ore has risen more strongly than the price of ores with 62 per cent iron content since early December. This has coincided with a seven per cent fall in steel prices.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, WHITEHAVEN COAL LIMITED – ASX WHC, RIO TINTO LIMITED – ASX RIO, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Woodside revs up China gas push

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Original article by Angela Macdonald-Smith
The Australian Financial Review – Page: 19 : 19-Jan-18

Woodside Petroleum has advised that it produced 21.9 million barrels of oil equivalent during the December 2017 quarter, which is 7.9 per cent lower than the previous corresponding period. Revenue fell by 6.9 per cent year-on-year to $US939m ($A1.2bn). Meanwhile, some analysts say Woodside’s production guidance of 85 million to 90 million boe for 2018 is lower than expected. CEO Peter Coleman has indicated that Woodside will expand its LNG marketing office in China amid growing Chinese demand for gas.

CORPORATES
WOODSIDE PETROLEUM LIMITED – ASX WPL, PETROCHINA COMPANY LIMITED, JP MORGAN AUSTRALIA LIMITED, BERNSTEIN INVESTMENT RESEARCH AND MANAGEMENT, WESTERN AUSTRALIA. DEPT OF THE PREMIER AND CABINET

Lithium prices to peak as local exports soar

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Original article by Peter Ker
The Australian Financial Review – Page: 16 : 16-Jan-18

Roskill MD Robert Baylis has warned of a looming oversupply of lithium as Australian producers ramp up output. Baylis notes that production of spodumene in particular is now much higher than global demand. Western Australia’s spodumene export volumes have risen by 84 per cent in recent years, with Tawana Resources, Altura Mining and Pilbara Minerals all set to open new mines in WA during the next six months. Baylis says it will take up to five years for global demand to catch up to supply.

CORPORATES
ROSKILL INFORMATION SERVICES, TAWANA RESOURCES NL – ASX TAW, ALTURA MINING LIMITED – ASX AJM, PILBARA MINERALS LIMITED – ASX PLS, MINERAL RESOURCES LIMITED – ASX MIN, GALAXY RESOURCES LIMITED – ASX GXY, NEOMETALS LIMITED – ASX NMT, GANFENG LITHIUM COMPANY LIMITED, UBS HOLDINGS PTY LTD, CRU, GLENCORE PLC

Hambro tips iron ore discounts to persist

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Original article by Peter Ker
The Australian Financial Review – Page: 20 : 13-Dec-17

BlackRock fund manager Evy Hambro expects lower-grade iron ore to continue to trade at a discount to the benchmark price for some time. The discount has widened amid growing demand in China for higher-grade ore. Hambro notes that Australian miners may find it increasingly difficult to maintain the quality of their iron ore, as some of the best-quality reserves in the Pilbara have been exhausted. Brazil-based Vale is also increasing production of higher-grade iron ore at its S11D project.

CORPORATES
BLACKROCK WORLD MINING TRUST PLC, VALE SA, FORTESCUE METALS GROUP LIMITED – ASX FMG, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO

LNG glut may last 10 years

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Original article by Matt Chambers
The Australian – Page: 20 : 7-Dec-17

Most analysts expect rising demand for LNG to result in a global shortage by 2023. However, Macquarie Group has forecast that the current global oversupply could potentially last until 2027. The prospect of increased output by countries such as the US, Russia and Qatar are among the factors that could contribute to the oversupply being sustained for longer than anticipated. Meanwhile, new data shows that the three LNG projects in Queensland shipped 1.704 million tonnes in November, compared with 1.68 million tonnes in October.

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG, ROYAL DUTCH SHELL PLC, SANTOS LIMITED – ASX STO, ENN GROUP

Can resources rally continue?

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Original article by Sarah Turner
The Australian Financial Review – Page: 33 : 9-Nov-17

Mining and energy stocks have been a major contributor to the Australian sharemarket’s rise above 6,000 points, with the price of both Brent crude oil and iron ore rebounding in recent weeks. Lachlan Shaw of UBS expects demand for commodities in China to remain strong, despite expectations of a slight decline in the nation’s economic growth, while David Lafferty of Natixis Asset Management notes that the world is currently experiencing synchronised economic growth.

CORPORATES
UBS HOLDINGS PTY LTD, NATIXIS ASSET MANAGEMENT, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, STANDARD AND POOR’S ASX 200 INDEX

Iron ore discount now ingrained, says Ellison

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Original article by Tess Ingram
The Australian Financial Review – Page: 23 : 2-Nov-17

Mineral Resources MD Chris Ellison expects lower-grade iron ore to continue to trade at a discount to the benchmark price for some time. He adds that the discount may widen further in the first few months of 2018. Fortescue Metals Group recently forecast that the discount will eventually narrow to its historic average of around 10 per cent. Meanwhile, Ellison says current iron ore pricing will have no impact on Mineral Resources’ proposed Bungalbin East and Jackson 5 mines.

CORPORATES
MINERAL RESOURCES LIMITED – ASX MIN, FORTESCUE METALS GROUP LIMITED – ASX FMG, CLEVELAND-CLIFFS INCORPORATED

Pollution controls lift FMG’s China discount

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Original article by Angus Grigg, James Thomson
The Australian Financial Review – Page: 13 & 19 : 31-Oct-17

SteelHome analyst Du Hongfeng says Chinese demand for iron ore is likely to fall by 56 million tonnes between September 2017 and March 2018, as steel mills reduce output during the winter months. He adds that this will require Fortescue Metals Group to maintain its current iron ore price discount until at least March, in order to retain its market share. Fortescue’s iron ore with 58.5 per cent iron content is currently being offered at a 23 per cent discount to the benchmark price for delivery in November, while its iron ore with 56.3 per cent iron content is trading at a 40 per cent discount.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, SHANGHAI STEELHOME INFORMATION TECHNOLOGY COMPANY LIMITED, UBS HOLDINGS PTY LTD