Posted: 01 Jan 2014 04:46 PM PST

Port Hedland and two other ports in Western Australia that account for a major portion of the global seaborne iron ore trade reopened and miners started to return to work on Wednesday after cyclone Christine caused a more than two-day shutdown.

Tropical Cyclone Christine, a category three storm which reached the Pilbara region of Australia late Monday forcing the closure of iron ore mines and halting shipments caused only minor infrastructure damage.

World's largest iron ore port reopens after cyclone

Port Hedland exports iron ore from mines owned by BHP Billiton (LON:BHP) and Fortescue Metals (ASX:FMG) , the world's number 3 and four exporters of the steelmaking material.

The port handled a near-record 22.3 million tonnes of cargo in November which was also a 37% increase over the year before.

Rio Tinto (LON:RIO), number two iron ore miner behind Brazil's Vale (NYSE:VALE), which is ramping up its annual capacity to 290 million tonnes, exports via the Dampier and Cape Lambert terminals north of Port Hedland.

China consumes close to 70% of the 1.1 billion tonne global trade, half of which is exported from Australia. Iron ore is the world's number two seaborne commodity trade after crude oil.

The benchmark CFR import price of 62% iron ore fines at China's Tianjin jumped to $134.20 a tonne in anticipation of the weather disruption. The raw material is up sharply since hitting lows of $110.40 a tonne in May last year according to data supplied by The Steel Index.

The Sydney Morning Herald reports that the impact of the cyclone on a longer term basis would in all likelihood be negligible:

"Cyclones in the Pilbara are part of what happens and disruption to shipping is built in to market expectations at this time of year," Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. "To be more concerned, the market would need to see a more protracted delay to shipments and production, or serious damage to infrastructure."

Image by bluecloudspatial

Supply worries cloud 2014 mining outlook

Posted: 01 Jan 2014 03:54 PM PST

2013 was a horrible year for commodities.

The Dow Jones-UBS Commodity Index, which tracks 22 commodities traded in London and on US markets, fell 9.6% in 2013, the third consecutive annual loss.

The Standard & Poor's GSCI Spot Index of 24 raw materials showed a more modest 2.2% decline this year, but it was the fifth year in a row of losses.

Corn fell by the most last year with a 40% retreat on the back of a record US harvest, while gold's 28% plunge was the worst performance in three decades and silver dropped 36%.

Data released by Barclays Capital in December showed that total global commodity asset values fell by a record $88 billion to $332 billion in the first 11 months of the year as investors withdrew $36.3 billion from the sector.

The value of precious metals assets under management fell by $78 billion compared to 2012 to total $119 billion, but December's continued slide would make those numbers even uglier.

The contrast between the performance of commodities and equities is startling.

The S&P 500 rose 29.6% in 2013, the biggest annual gain since 1997, while the Dow Industrial Index notched up its 52nd record close of the year on Tuesday. The blue chip index climbed 26.5% in 2013, the best performance since 1995.

The tech-laden Nasdaq Composite ended the year its highest level since September 2000 after rising 38% over the course of 2013.

Going into 2014 few are predicting a strong rebound in the price of gold in the absence of a strong catalyst like a fresh financial or geopolitical crisis and industrial demand for silver has not been enough to support prices, but commodities as a whole could find favour again as record-setting stock markets begin to look bubbly.

This 50-year chart of the gold price vs the S&P 500 shows just how overvalued stocks in particularly the US has become.

Bloomberg quotes Jeremy Baker, commodity strategist at Harcourt Investment Consulting in Zurich as saying on top of concerns about China's slowing growth "perceptions of improving supply and supply overhangs pressured commodities" in 2013.

The Wall Street Journal quotes Kevin Norrish, managing director of commodity research with Barclays in London as saying "commodities are more likely to trade based on each market's own supply-and-demand dynamics rather than investor views on the sector as a whole."

A glut in copper and iron ore is predicted for 2014 as South American copper giants bring new mines on stream and Australia's iron ore output continues to grow rapidly.

While demand for copper have remained stronger than previously predicted for 2013 helping to contain the slump in the price to 7.4% for the year, the red metal is expected to come under pressure as massive new supply starts hitting the market.

For the past seven years annual supply growth has been essentially static falling to as lows as 0.4% a year in 2010 to 2011, but growth in copper mine supply should accelerate further in 2014. Greenfield projects led by the massive new Ministro Hales mine in Chile coming on stream should see supply top 6% this year and average over 4% through 2016.

The iron ore supply-demand picture is possible even more damaging to the price of the steelmaking raw material, which ended 2013 surprisingly strong at $134 a tonne, up sharply from lows of the year of $110 struck mid-year.

While Chinese iron ore imports will grow 7.4% next year, the world's top exporter Australia will increase cargoes a whopping 22.1% to 709 million tonnes as projects by Rio Tinto (LON:RIO), Fortescue Metals Group (ASX:FMG) and BHP Billiton (LON, ASX: BHP) come on stream.

Brazil, led by world number one iron ore miner Vale (NYSE:VALE), is set to up exports 9.1% to 352 million tonnes.

India, which has seen exports fall from 120 million tonnes to close to just 11 million tonnes this year, will also re-enter the market as a self-imposed ban on exports expire and stockpiles are sold on.

Other metals are looking better for 2014.

While nickel oversupply that has persisted for years has not translated into significant cuts in production – global output is forecast to rise for the first time to over 2m tonnes in 2015, up from 1.4m tonnes in 2007 – a ban on ore exports from top producer Indonesia could turn the market on its head.

Three-months nickel on the LME fell almost 20% in 2013 to around $14,000 this week from opening levels of $17,450 a tonne but Indonesia dominates the nickel export business, accounting for 28% of global supply, and should the ban come into effect as planned from January 1 prices could rise significantly.

Zinc, lead and tin could also fare better this year as mine closures ease years of oversupply and industrial demand in developed markets recover.

Platinum group metals and specifically palladium could also benefit from an improved vehicle market in Europe and elsewhere.

SLIDESHOW: Gold price from QE1 to the taper to chair Yellen

Posted: 01 Jan 2014 02:34 PM PST

When US Federal Reserve Chairman Ben Bernanke testified in front of the US Congress in July last year he famously said said he "doesn't pretend to understand gold prices" and "nobody does".

During incoming chair Janet Yellen's confirmation hearings in November she echoed Bernanke's befuddlement about the gold price adding that she doesn't "think anybody has a very good model of what makes gold prices go up or down."

Yellen, a noted monetary policy dove and considered an architect of the Fed's QE program, did have some insight into gold safe haven status: "It is an asset that people want to hold when they're very fearful about potential financial market catastrophe or economic troubles and tail risks. And when there is financial market turbulence, often we see gold prices rise as people flee into them."

While Yellen pleaded ignorance about where the gold price is headed, she is more confident about the state of the stock market saying traditional valuation methods do not suggest equities are behaving "bubble like".

Yellen supported the modest start to tapering off asset purchases despite her beliefs that the US economy is falling "far short". But 2014 could bring a few surprises, not least of which a stock market correction as this 50-year chart shows.

CLICK BELOW FOR A SLIDESHOW OF THE ROCKY RELATIONSHIP BETWEEN THE US FEDERAL RESERVE AND THE PRICE OF GOLD:

Australian iron ore exports resume after cyclone

Australian iron ore exports resume after cyclone

0 Comment for "Australian iron ore exports resume after cyclone"

Popular Posts