SUPPLY AND DEMAND

China unlikely to target iron ore in virus blame game

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Original article by Sarah Turner
The Australian Financial Review – Page: 27 : 13-May-20

Commonwealth Bank commodity strategist Vivek Dhar does not expect China to reduce imports of Australian iron ore despite the growing trade tensions between the two nations. He contends that China is too reliant on iron ore from Australia, noting that 85 per cent of its iron ore imports are sourced from Australia. Dhar adds that exports of commodities such as coal are at greater risk, as they can be sourced more easily from other countries. Analysts also expect any economic stimulus measures in China to boost demand for steel, and therefore iron ore.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Price collapse burying 31pc of coal mines

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Original article by Peter Ker
The Australian Financial Review – Page: 14 & 16 : 11-May-20

The coronavirus pandemic has resulted in a sharp fall in demand from major thermal coal buyers such as Japan and India. This has in turn seen the price of top quality coal from New South Wales and Queensland falling by 27 per cent and 30 per cent respectively. Rory Simington of Wood Mackenzie estimates that about 31 per cent of Australia’s thermal coal exports are unprofitable at current prices. He adds that a significant proportion of Australia’s coal output is sold via long-term contracts. However, the recent price falls will eventually flow through to future contracts.

CORPORATES
WOOD MACKENZIE

Full steel ahead for Fortescue as China draws down ore stockpiles

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Original article by Brad Thompson
The Australian Financial Review – Page: 21 : 6-May-20

Fortescue Metals Group CEO Elizabeth Gaines expects demand for iron ore to remain strong due to China’s urbanisation policy. China produced 234.5 million tonnes of crude steel in the March quarter, which is 1.2 per cent higher than the same period in 2019. Gaines says that any additional economic stimulus in China would further boost demand for steel, and therefore iron ore. Meanwhile, Gaines is confident that Fortescue’s application to increase its export capacity at Port Hedland by 20 per cent will be approved.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG

CSL to step up flu vaccine production

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Original article by Jared Lynch
The Australian – Page: 15 : 20-Apr-20

CSL subsidiary Seqirus will produce an additional two million doses of the influenza vaccine, amid strong demand during the coronavirus pandemic. Danielle Dowell of Seqirus says the company is set to supply a record number of flu shots during the 2020 flu season, and stresses that consumers should call their pharmacy or medical clinic ahead of time to ensure that the vaccine is available. The federal government will provide 13.5 million free flu shots via its National Immunisation Program. The flu vaccine does not provide protection against the coronavirus.

CORPORATES
CSL LIMITED – ASX CSL, SEQIRUS PTY LTD, SIGMA HEALTHCARE LIMITED – ASX SIG, AUSTRALIAN PHARMACEUTICAL INDUSTRIES LIMITED – ASX API

Virus shorts electricity demand

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Original article by Perry Williams
The Australian – Page: 13 & 20 : 16-Apr-20

RepuTex has forecast that demand across Australia’s national electricity market will fall by 22.5 per cent in May due to the coronavirus lockdown. The consultancy also warns that wholesale electricity spot prices could fall below $40 per megawatt hour, which in turn could result in high-cost coal-fired power stations operating at a loss. The wholesale spot price has already fallen to around $45/MWh in most states, although RepuTex says this could rise to around $60/MWh in June if lockdown restrictions begin to ease.

CORPORATES
REPUTEX AUSTRALIA PACIFIC PTY LTD

Rio Tinto says China shows growing iron ore appetite

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Original article by Peter Ker
The Australian Financial Review – Page: 15 & 22 : 8-Apr-20

The head of Rio Tinto’s iron ore division, Chris Salisbury, notes that Chinese demand for the steel input remained strong while the nation was contending with the coronavirus earlier in 2020. He adds that China’s steel stockpiles have started to fall and Rio Tinto’s order books are full. Chinese steel mills buy more than 70 per cent of Rio Tinto’s iron ore, and China accounted for 51.3 per cent of the resources group’s revenue in 2019. Australia’s iron ore exports are forecast to top $101bn in 2019-20.

CORPORATES
RIO TINTO LIMITED – ASX RIO

China steel stockpiles a worrying sign

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Original article by Simon Evans, Peter Ker
The Australian Financial Review – Page: 16 : 3-Mar-20

There are reports of growing stockpiles of steel in China, which accounts for around half of the world’s production. Stockpiles have increased because construction companies and other steel users in China have been in partial shutdown due to the coronavirus, and the growing stockpiles have sparked concern of a knock-on effect to Australian iron ore miners such as Fortescue Metals Group and BHP. However, Fortescue CEO Elizabeth Gaines says the coronavirus has not impacted on its shipping schedule at this stage, while she notes that Chinese steel mills are still operating.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, BHP GROUP LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, BLUESCOPE STEEL LIMITED – ASX BSL

Shortage of housing to hit big cities

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Original article by Michael Bleby
The Australian Financial Review – Page: 31 & 34 : 13-Feb-20

A new report from Charter Keck Cramer has warned that the recent slowdown in apartment developments means that Sydney, Melbourne and Brisbane will face a housing supply shortage by the end of 2021. Dwelling approvals across Australia fell by 18.5 per cent in calendar 2018, to the lowest level since 2012; all three east coast cities recorded a decline in apartment developments for the year. Rob Burgess of Charter Keck Cramer says the looming housing shortage will put upward pressure on rents.

CORPORATES
CHARTER KECK CRAMER

Seeds of next LNG glut already being sown

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Original article by Angela Macdonald-Smith
The Australian Financial Review – Page: 17 : 9-Jan-20

Growth in Asian demand for LNG slowed to 2.1 per cent in 2019, amid a global oversupply. However, Bernstein Research forecasts that the glut will end in the second half of 2020 as Asian demand rebounds and a five-year expansion of global output comes to an end. Bernstein also cautions that another oversupply could emerge in the mid-2020s, with a number of new LNG projects slated for coming years. The firm anticipates that projects to be approved over the next 18 months will boost global production by about 70 million tonnes a year.

CORPORATES
BERNSTEIN INVESTMENT RESEARCH AND MANAGEMENT, WOODSIDE PETROLEUM LIMITED – ASX WPL, SANTOS LIMITED – ASX STO, OIL SEARCH LIMITED – ASX OSH, EXXONMOBIL CORPORATION, ENTE NAZIONALE IDROCARBURI SPA, INPEX CORPORATION, TOTAL SA

Iron’s endless summer keeps on keeping on

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Original article by Peter Ker
The Australian Financial Review – Page: 43 : 21-Dec-19

Shares in Fortescue Metals Group are trading at an 11-year high, boosted by factors such as continued strong demand for iron ore in China and supply disruptions in Brazil. Meanwhile, Rio Tinto’s shares have regularly traded above $100 in 2019, and the stock has not fallen below $35 in the last decade. Demand for iron ore has defied expectations over the last 10 years. The price of the steel input peaked at almost $US190 per tonne in 2011; its fall to around $US80/tonne in subsequent years prompted some observers to forecast that the iron ore boom was over. However, Australia’s iron ore exports reached a record $77bn in 2018-19 and could top $81bn in 2019-20. Likewise, some experts forecast that China’s annual steel production will exceed one million tonnes for the first time in 2020.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, RIO TINTO LIMITED – ASX RIO, BHP GROUP LIMITED – ASX BHP, VALE SA