BUSINESS FORECASTING

Unseasonal iron ore rally boosts budget

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Original article by Peter Ker
The Australian Financial Review – Page: 10 : 21-Jul-17

The iron ore price peaked at a three-month high above $US70 a tonne on 20 July. The price of the steel input has risen by 31 per cent in just over a month, and it has averaged $US65.12 a tonne since the start of July. Paul Bloxham of HSBC estimates that this will increase the Australian Government’s revenue by about $US1.25bn in 2017-18. The May 2017 Budget had forecast that iron ore would average $US55 a tonne in 2017-18. Bloxham expects the iron ore price to fall to around $US50 a tonne by late 2017.

CORPORATES
HSBC AUSTRALIA HOLDINGS PTY LTD, AUSTRALIA. DEPT OF THE TREASURY, UBS HOLDINGS PTY LTD

Analysts trim commodity forecasts, examine mining

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Original article by Myriam Robin
The Australian Financial Review – Page: 20 : 10-Jul-17

The iron ore price was trading above $US62 per tonne on 7 July 2017, but the latest forecasts from Australia’s Department of Industry, Innovation & Science suggest that it could test $US48 by 2018. The Department says the price of copper could fall by 4.1 per cent in 2018, while it expects metallurgical coal to fall by 28 per cent to $US137 a tonne in 2018. Capital Economics also forecasts that the iron ore price will fall, and UBS has downgraded its forecast for the copper price in 2017-18.

CORPORATES
AUSTRALIA. DEPT OF INDUSTRY, INNOVATION AND SCIENCE, CAPITAL ECONOMICS LIMITED, UBS HOLDINGS PTY LTD, MACQUARIE GROUP LIMITED – ASX MQG, DEUTSCHE BANK AG, T ROWE PRICE GROUP INCORPORATED

Global investors moving ASX funds elsewhere

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Original article by Myriam Robin
The Australian Financial Review – Page: 31 : 23-Jun-17

Some fund managers suggest that the Australian sharemarket’s 1.6 per cent downturn on 21 June was prompted by foreign investors shifting out of local equities. Meanwhile, Tony Brennan and Mark Tomlins of Citigroup say Asian sharemarkets may be more attractive to international investors at present, given their better prospects for earnings upgrades. Hasan Tevfik of Credit Suisse adds that passive fund managers are likely to reduce their exposure to Australian shares in coming years as the MSCI Asia-Pacific ex-Japan’s weighting toward Chinese and Hong Kong-listed shares increases.

CORPORATES
CITIGROUP PTY LTD, CREDIT SUISSE (AUSTRALIA) LIMITED, MSCI ASIA-PACIFIC EX-JAPAN INDEX, MSCI EMERGING MARKETS INDEX, MSCI INCORPORATED, MACQUARIE GROUP LIMITED – ASX MQG, COMPUTERSHARE LIMITED – ASX CPU, MSCI AUSTRALIA INDEX

Iron ore fall continues but Deutsche says China steel demand will hold

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Original article by Jessica Sier
The Australian Financial Review – Page: 29 : 15-Jun-17

The spot price of iron ore for delivery to the port of Qingdao in China has fallen below $US54 per tonne, its lowest level in 12 months. A number of factors have contributed to the recent downturn in the iron ore price, including a sharp fall in Chinese steel exports, a growing move toward protectionism by other steel-producing nations and China’s move to reduce steel capacity. However, Deutsche Bank expects demand for steel in China to remain relatively strong.

CORPORATES
DEUTSCHE BANK AG, ROY HILL HOLDINGS PTY LTD

Quarterly coal contract system to ‘fall over’

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Original article by Julie-anne Sprague
The Australian Financial Review – Page: 25 : 8-Jun-17

There is growing expectation that Japanese coal buyers will abandon the traditional quarterly contract price system in favour of one based on the spot price. Wesfarmers’ incoming CEO Rob Scott believes that Japan’s steel mills could opt for a new pricing system within weeks. BHP Billiton’s chief commercial officer, Arnoud Balhuizen, also recently flagged a shift away from contract pricing. Meanwhile, Scott has indicated that the sale of Wesfarmers’ coal assets is still on the agenda.

CORPORATES
WESFARMERS LIMITED – ASX WES, BHP BILLITON LIMITED – ASX BHP, THE MELBOURNE MINING CLUB, STANWELL CORPORATION LIMITED

Future lies with autonomous cars: Ghosn

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Original article by Andrew Whire
The Australian – Page: 17 & 20 : 6-Jun-17

Nissan Renault Alliance chairman Carlos Ghosn has rejected suggestions that growth in demand for autonomous and driverless cars will decimate the car industry. It has been claimed that such cars will lead to a significant drop in car ownership as people switch to ride-sharing. However, Ghosn does believe that autonomous cars will comprise a majority of all cars on the road by the end of 2022. He does not forsee much in the way of increased demand for electric cars in Australia without the introduction of government subsidies.

CORPORATES
NISSAN MOTOR COMPANY LIMITED, RENAULT SA, MITSUBISHI MOTORS CORPORATION, VOLKSWAGEN AG, GENERAL MOTORS CORPORATION

Investors betting big on potash

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Original article by Tess Ingram
The Australian Financial Review – Page: 20 : 5-Jun-17

BHP Billiton forecasts that global demand for potash will increase 2-3 per cent by 2030, in line with expectations of rising population growth and demand for crop foods. BHP hopes to commence production at its Jansen potash project in Canada by 2022, while Kore Potash is also aiming for a 2022 start date for its Kola potassium chloride project. Billionaires Gina Rinehart and Kerry Stokes have recently made investments in potash projects.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, KORE POTASH LIMITED – ASX K2P, HANCOCK PROSPECTING PTY LTD, SIRIUS MINERALS PLC, BC IRON LIMITED – ASX BCI, ANGLO AMERICAN PLC, MONDI GROUP, SUMMIT PRIVATE EQUITY, SQM

China’s call for higher grade iron ore a worry

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Original article by Tess Ingram
The Australian Financial Review – Page: 18 : 23-May-17

Research by UBS shows that the break-even cost for producers of lower-grade iron ore has increased due to the widening spread between such iron ore and the benchmark index price. As a result, the break-even cost for Fortescue Metals Group has risen by $US13 per tonne to $US43 in the last 12 months. Fortescue is likely to be affected by Chinese steel mills’ growing demand for higher-quality iron ore as less efficient mills are closed down.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, UBS HOLDINGS PTY LTD, DEUTSCHE BANK AG, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO

Protectionism hurts growth: BHP

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Original article by Peter Ker
The Australian Financial Review – Page: 3 : 28-Apr-17

BHP Billiton’s Huw McKay says global economic growth in 2017 is likely to be at the higher end of the group’s recent forecast of between three and 3.5 per cent. However, he warns that global growth is likely to slow over the rest of the current decade as some nations adopt protectionist policies. McKay adds that this will in turn affect global demand for resource commodities. BHP’s Vicky Binns says factors such as a looming increase in iron ore supply and lower demand for steel in China are likely to weigh on the iron ore price in coming months.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, VALE SA, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT

Prices of iron ore grades ‘will narrow’

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Original article by Tess Ingram, Lisa Murray
The Australian Financial Review – Page: 21 : 24-Apr-17

The price of iron ore with 62 per cent iron content averaged $US85.52 per tonne in the March 2017 quarter, while lower-grade iron ore averaged $US52.96 per tonne. However, some analysts do not expect the price differential to be sustained. Mark Pervan of AME Group notes that Chinese steel mills are already beginning to use lower-grade iron ore again. Meanwhile, China Iron & Steel Association vice-president Li Xinchuang has forecast that the iron ore price will average about $US65 per tonne in 2017.

CORPORATES
AME GROUP PTY LTD, CHINA IRON AND STEEL ASSOCIATION, FORTESCUE METALS GROUP LIMITED – ASX FMG, ATLAS IRON LIMITED – ASX AGO, UBS HOLDINGS PTY LTD, SHANGHAI STEELHOME INFORMATION TECHNOLOGY COMPANY LIMITED