IRON ORE – PRICES

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

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

Fortescue faces 70pc value hit from iron ore discount

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Original article by Paul Garvey
The Australian – Page: 30 : 3-Nov-17

Fortescue Metals Group’s lower-grade iron ore is trading at a discount of about 30 per cent to the benchmark price. Sam Webb of Credit Suisse estimates that Fortescue’s net present value could fall to $A1.40 per share if the this discount persists. Webb adds that Fortescue’s future capital expenditure and exploration plans may be affected if the price discount is sustained until mid-2018. Credit Suisse has a share price target of $A6.10 on Fortescue. The stock rose 4.06 per cent to $A4.87 on 2 November.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, CREDIT SUISSE (AUSTRALIA) LIMITED

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

Iron ore market doesn’t warrant extra supply: Fortescue

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Original article by Peter Ker
The Australian Financial Review – Page: 15 & 18 : 1-Nov-17

Rio Tinto CEO Jean-Sebastien Jacques recently told staff via an internal communication that its Pilbara iron ore shipments could eventually top 400 million tonnes a year, compared with its 2017 target of 330 million tonnes. However, Fortescue Metals Group CEO Nev Power questions whether there is sufficient demand for iron ore at present to justify a large increase in supply, noting that shareholder returns will be adversely affected if resources projects are over-developed. Meanwhile, Power expects the price discount for Fortescue’s lower-grade iron ore to narrow over time.

CORPORATES
RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG, ROY HILL HOLDINGS PTY LTD, ARRIUM LIMITED – ASX ARI, LIBERTY HOUSE GROUP, CLEVELAND-CLIFFS INCORPORATED, METALICITY LIMTED – ASX MCT

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

Fortescue adamant that wide iron ore discount will revert

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Original article by Tess Ingram
The Australian Financial Review – Page: 17 : 27-Oct-17

Fortescue Metals Group’s cash reserves rose from $US1.8bn to $US2.3bn in the September quarter. Iron ore shipments totalled 44 million tonnes, with "C1" costs falling marginally to $US12.15 per tonne. Fortescue has reduced its price realisation guidance for the second time in 2017-18, and now expects to receive between 70 and 75 per cent of the benchmark index price for its lower-grade ore. CEO Nev Power suggested earlier in 2017 that the price discount would not be sustained, but he now says it is difficult to predict when it will narrow.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, MACQUARIE GROUP LIMITED – ASX MQG

Chinese entrench iron ore discount

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Original article by Paul Garvey
The Australian – Page: 20 : 24-Oct-17

The price discount between iron ore with 62 per cent content and lower-grade ore has traditionally been within the range of 10-15 per cent, although it has widened significantly in 2017. Chris Salisbury, the head of Rio Tinto’s iron ore division, says China’s decision to curb steel production during winter should not affect demand for Rio’s higher-grade iron ore. He adds that this in turn will ensure that the price discount will be sustained. Salisbury also says the widening discount appears to be structural.

CORPORATES
RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG, ATLAS IRON LIMITED – ASX AGO, UBS HOLDINGS PTY LTD, TAFE WESTERN AUSTRALIA

Discounts on FMG’s iron ore forced higher

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Original article by Angus Grigg, Tess Ingram, James Thomson
The Australian Financial Review – Page: 15 : 18-Sep-17

The discount that Fortescue Metals Group receives on sales of its iron ore with 56.7 per cent iron content has widened so far in 2017-18. This discount to the benchmark price for 62 per cent iron ore averaged 23 per cent in 2016-17, compared with an historical average of 10-15 per cent. However, the discount widened to 27 per cent in the June 2017 quarter. It increased to 32 per cent in August and rose to 35 per cent in early September. Fortescue’s outgoing CEO Nev Power expects the current discount to be maintained in the near-term.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, BHP BILLITON ALUMINIUM (HOLDINGS) PTY LTD, RIO TINTO LIMITED – ASX RIO, VALE SA, UBS HOLDINGS PTY LTD, SHANGHAI STEELHOME INFORMATION TECHNOLOGY COMPANY LIMITED

BHP upbeat on ore, coal price outlook

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Original article by Matt Chambers
The Australian – Page: 18 : 4-Sep-17

The latest financial results of BHP Billiton and Rio Tinto were boosted by the rise in iron ore and coal prices. BHP’s chief commercial officer Arnoud Balhuizen says the resources giant expects the price of iron ore to remain strong until at least the end of 2017, while the price of coking coal could potentially be sustained beyond 2017. Meanwhile, the outlook for Fortescue Metals Group will be heavily influenced by Chinese steel mills’ demand for higher-grade iron ore. The price gap between benchmark iron ore and the 58 per cent iron ore produced by Fortescue has widened to more than $US20 per tonne.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG, ORGANISATION OF PETROLEUM EXPORTING COUNTRIES