this is the game - last actual reports re chinese
Post# of 8059
Posted On: 07/30/2014 11:08:05 AM
this is the game - last actual reports re chinese ore were only averaging 15% iron-reports consistently indicate marginal chinese costs of 120-180 (4% ore at 1 mine - tv report i personally saw)
chinese policy is to eliminate or consolidate the 1000 small mills -big question is what policy is as to mines w poor ore-will they subsidize or let market forces reduce chinese iron output greatly- thus making up for the big 4's supply increases and stabilizing iron around $100/ton
The big three miners are no doubt hoping that the lower iron ore price will knock out Chinese domestic output, as well as higher-cost, smaller-scale mines around the globe, and stymie efforts by Indian miners to re-enter the seaborne market.
Official Chinese data suggests that domestic output has yet to be shut down, but there are always question marks over the accuracy of the data.
According to the National Bureau of Statistics, June iron ore output was 139.3 million tonnes, up 7.3 percent from May, taking first-half production to 710.6 million tonnes, a gain of 9.9 percent from the same period a year ago.
What isn't in the official figures is the iron ore grade, which is believed to be declining and may now average something close to 20 percent, well below the global standard of about 62 percent iron content.
At current prices, about a third of Chinese production is loss-making, according to a Macquarie research report released this month.
The bank estimates that Chinese iron ore output was actually down 3 percent in the January to May period, and production cutbacks have been accelerating in recent months.
A total of 30 million to 50 million tonnes of iron ore at a 62 percent iron content equivalent may have been cut from domestic output in the year to May, the report said.
This helps explain the 19 percent gain in iron ore imports in the first six months of the year, according to Chinese customs data.
The numbers also show the impact of the big three miners, with imports from Australia rising 33.3 percent and those from Brazil by 14.5 percent.
The current market situation suggests that iron ore prices will struggle to rise above $100 a tonne. Any rally above that level would bring Chinese domestic output back, and encourage smaller miners in other countries.
chinese policy is to eliminate or consolidate the 1000 small mills -big question is what policy is as to mines w poor ore-will they subsidize or let market forces reduce chinese iron output greatly- thus making up for the big 4's supply increases and stabilizing iron around $100/ton
The big three miners are no doubt hoping that the lower iron ore price will knock out Chinese domestic output, as well as higher-cost, smaller-scale mines around the globe, and stymie efforts by Indian miners to re-enter the seaborne market.
Official Chinese data suggests that domestic output has yet to be shut down, but there are always question marks over the accuracy of the data.
According to the National Bureau of Statistics, June iron ore output was 139.3 million tonnes, up 7.3 percent from May, taking first-half production to 710.6 million tonnes, a gain of 9.9 percent from the same period a year ago.
What isn't in the official figures is the iron ore grade, which is believed to be declining and may now average something close to 20 percent, well below the global standard of about 62 percent iron content.
At current prices, about a third of Chinese production is loss-making, according to a Macquarie research report released this month.
The bank estimates that Chinese iron ore output was actually down 3 percent in the January to May period, and production cutbacks have been accelerating in recent months.
A total of 30 million to 50 million tonnes of iron ore at a 62 percent iron content equivalent may have been cut from domestic output in the year to May, the report said.
This helps explain the 19 percent gain in iron ore imports in the first six months of the year, according to Chinese customs data.
The numbers also show the impact of the big three miners, with imports from Australia rising 33.3 percent and those from Brazil by 14.5 percent.
The current market situation suggests that iron ore prices will struggle to rise above $100 a tonne. Any rally above that level would bring Chinese domestic output back, and encourage smaller miners in other countries.
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