BUSINESS FORECASTING

Iron ore price surges, but producers wary of lifting output

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Original article by Jessica Sier
The Australian Financial Review – Page: 31 : 15-Nov-16

The spot price of iron ore with 62 per cent content has risen by 102 per cent since early 2016, and 22 per cent so far in November. However, Daniel Morgan of UBS does not believe that the current price is sustainable, noting that iron ore miners have not increased their production capacity in response to the price surge. He adds that the iron ore market is unlikely to benefit from the election of Donald Trump, as the US is not an iron ore importer.

CORPORATES
UBS HOLDINGS PTY LTD, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, MACQUARIE WEALTH MANAGEMENT, BC IRON LIMITED – ASX BCI, ATLAS IRON LIMITED – ASX AGO, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO

Coal contract prices expected to stay high

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Original article by Peter Ker
The Australian Financial Review – Page: 15 & 20 : 9-Nov-16

The spot price of premium hard coking coal has risen to more than $US289 per tonne in early November 2016. Coal producers and buyers recently settled on a contract price of $US200/tonne for the December quarter. Whitehaven Coal CEO Paul Flynn says the spike in the spot price should ensure that contract prices rise again in the March 2017 quarter. He also anticipates a rise in the price of thermal and semi-soft coking coal.

CORPORATES
WHITEHAVEN COAL LIMITED – ASX WHC, MACQUARIE GROUP LIMITED – ASX MQG, GLENCORE PLC

Iron ore won’t drop to $US40: Fortescue CEO

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Original article by Tess Ingram
The Australian Financial Review – Page: 20 : 28-Oct-16

The iron ore price has rallied to more than $US60 per tonne, compared with just $US38/tonne in late 2015. Fortescue Metals Group CEO Nev Power says his company expects the price of the steel input to trade within a range of $US40-$US60 in 2017. He adds that an improvement in sentiment could prompt a further rise, adding that there is unlikely to be a large enough fall in demand for iron ore in China for the price to retreat to around $US40. Morgan Stanley forecasts that iron ore will average $US42 in the December 2016 quarter.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, MORGAN STANLEY AUSTRALIA LIMITED, ROY HILL HOLDINGS PTY LTD, VALE SA

Iron ore price set for big fall by mid-2017

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Original article by Brian Robins
The Age – Page: 23 : 21-Oct-16

Iron ore is currently trading at around $US55 per tonne, but Fortescue Metals Group CEO Nev Power says the price is likely to fall in 2017 due to a looming increase in global supply. Power says the market has priced in the additional supply from the Roy Hill mine in Western Australia and the commencement of production at Vale’s S11D project. This will offset an expected downturn in iron ore production in China.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, ROY HILL HOLDINGS PTY LTD, VALE SA, RIO TINTO LIMITED – ASX RIO, BHP BILLITON LIMITED – ASX BHP

BHP flags end of slump

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Original article by Matt Chambers
The Australian – Page: 21 : 20-Oct-16

BHP Billiton’s production report for the September 2016 quarter shows that copper and oil output fell during the period, while there was a modest rise in metallurgical coal output and iron ore production was steady. Meanwhile, CEO Andrew Mackenzie noted that there are indications that commodity markets are starting to rebalance. Fortescue Metals Group chairman Andrew Forrest recently suggested that the market has bottomed.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, FORTESCUE METALS GROUP LIMITED – ASX FMG, CITIGROUP PTY LTD, RIO TINTO LIMITED – ASX RIO

Worst is behind us: Forrest calls bottom of cycle

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Original article by Jacob Greber
The Australian Financial Review – Page: 6 : 13-Oct-16

Andrew Forrest has used a National Press Club speech to forecast an upturn in commodity prices, expressing his view that the sector is near the bottom of a major cycle. Forrest’s comments follow revelations that Japanese steel mills have settled coking coal price negotiations for the December 2016 quarter at $US200 per tonne. The Department of Industry, Innovation & Science recently forecast that the benchmark price for coal contracts will average $US99/tonne in 2016 and $US108 in 2017.

CORPORATES
AUSTRALIA. DEPT OF INDUSTRY, INNOVATION AND SCIENCE, NATIONAL PRESS CLUB (AUSTRALIA), PEABODY ENERGY AUSTRALIA COAL PTY LTD, NIPPON STEEL AND SUMITOMO METAL CORPORATION, MOODY’S INVESTORS SERVICE INCORPORATED

Surging coal puts pricing system in peril

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Original article by Matt Chambers
The Australian – Page: 17 & 18 : 10-Oct-16

The spot price of Australian coking coal has risen by 155 since early June 2016, to $US213 per tonne. This compares with a contract price of just $US92.50 per tonne for the September quarter. The spike in the spot price has prompted Japanese steel mills to delay the settlement of contract prices for the December quarter. Macquarie notes that there is a growing push to phase out the quarterly contract system in favour of index pricing, although Whitehaven Coal Paul Flynn says this is unlikely to occur in the near-term.

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG, WHITEHAVEN COAL LIMITED – ASX WHC, NIPPON STEEL AND SUMITOMO METAL CORPORATION, ANGLO AMERICAN PLC, THE STEEL INDEX LIMITED

Morgan Stanley calls coal price peak as controls relax

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Original article by Peter Ker
The Australian Financial Review – Page: 29 : 5-Oct-16

The price of coking coal has risen by 177 per cent in 2016, and the price of thermal coal is up 55 per cent. However, Morgan Stanley believes that the Chinese Government’s move to further ease restrictions on the nation’s coal production may rein in coal prices. Meanwhile, the Singapore Exchange’s Adrian Lunt says the large difference between the contract price for coking coal in the September quarter and the spot price may prompt more producers to abandon quarterly pricing in favour of index-linked pricing.

CORPORATES
MORGAN STANLEY AUSTRALIA LIMITED, SINGAPORE EXCHANGE LIMITED, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, WHITEHAVEN COAL LIMITED – ASX WHC, STANMORE COAL LIMITED – ASX SMR, NEW HOPE COAL AUSTRALIA, AUSTRALIAN PACIFIC COAL LIMITED – ASX AQC, GLENCORE PLC, ANGLO AMERICAN PLC, TECK CORPORATION

Tighter supply means iron ore won’t fall to $US30: investors

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Original article by Peter Ker
The Australian Financial Review – Page: 21 : 15-Sep-16

Colonial First State Global Asset Management’s Todd Warren notes that a number of factors have contributed to lower-than-expected iron ore supply in 2016. However, he says the most bearish forecasts for the iron ore price are unlikely to be realised. The price of the steel input has retreated in recent weeks, although it has remained above $US50 per tonne for most of the last six months. Citigroup forecasts that the iron ore price will average $US45/tonne in 2017.

CORPORATES
COLONIAL FIRST STATE GLOBAL ASSET MANAGEMENT, CITIGROUP PTY LTD, MORGAN STANLEY AUSTRALIA LIMITED, CLIFFS NATURAL RESOURCES INCORPORATED, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, SAMARCO MINERACAO SA

Ore fears as China steel hits its peak

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Original article by Rowan Callick
The Australian – Page: 17 & 18 : 12-Sep-16

China Metallurgical Industry Planning & Research Institute president Li Xinchuang expects the iron ore price to remain within a range of $US50 to $US60 per tonne for some time. He also says steel production in China peaked in 2014, when output totalled 823 million tonnes. Steel production fell to 804 million tonnes in 2015. Meanwhile, China’s steel exports have risen in recent years while domestic consumption has declined, while Li has criticised the Australian Government’s recent stance on Chinese investment.

CORPORATES
CHINA METALLURGICAL INDUSTRY PLANNING AND RESEARCH INSTITUTE, RIO TINTO LIMITED – ASX RIO, BHP BILLITON LIMITED – ASX BHP, FORTESCUE METALS GROUP LIMITED – ASX FMG, VALE SA