May 17, 2020

[REPORT] Mining Stimulates Growth with Rise in Exports

BHP Billiton
Rio Tinto
Fortescue Metals Group
Arrium Limi
Admin
2 min
[REPORT] Mining Stimulates Growth with Rise in Exports
The mining industry has been a driving force for Australias economic growth figures which grew at 1.1 percent for the three months to March.According to...

The mining industry has been a driving force for Australia’s economic growth figures which grew at 1.1 percent for the three months to March.

According to official national account figures released on Wednesday, the annual growth rose 3.5 percent, the fastest rate in nearly two years and above the average of the past decade. Almost 80 percent of the growth for the quarter was contributed by the mining sector.

During the first quarter of 2014, prices for some of Australia’s most important commodities fell, showcasing the importance of the export growth underway in the iron ore industry.

Five of Australia’s largest iron ore miners, BHP Billiton, Rio Tinto, Fortescue Metals Group, Arrium Limited and Atlas Iron, have significantly increased exports helping push the standard iron ore price down by more than 30 percent.

Another report published on Wednesday showed that Port Hedland, Australia’s largest iron ore port, increased exports by 3.55 percent between April and May, setting a monthly record with over 36 million tons. That number could grow as further as BHP and Fortescue plan to export more in the June quarter.

And while the news sounds hopeful for Australia’s economy, experts aren’t buying it.

According to Deutsche Bank chief economist Adam Boyton, rising exports from a small number of companies won’t solve all of Australia’s challenges. Because exports and resources are not very labor intensive, they do little to support employment and wage growth.

BHP, Fortescue and Rio Tinto have all vowed to continue growing exports for years to come.

The value of iron ore exports should reach $76.8 billion in fiscal 2014, up from $57.1 billion, according to the Bureau of Resources and Energy Economics.

Aside from mining, construction and financial services were the biggest suppliers of growth for Australia.

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May 6, 2021

Copper, iron ore surge as Chinese investors unleash demand

Copper
Iron ore
Renewables
EVs
3 min
Iron ore broke $200 a tonne for the first time, while copper approached a record high as Chinese investors unleashed fresh demand following May holiday

The reopening of major industrial economies is sparking a surge across commodities markets from corn to lumber, with tin climbing above $30,000 a tonne for the first time since 2011 on Thursday.

In the wake of mounting evidence of inflation fuelled by higher raw materials prices, investors are also increasingly focused on when the U.S. Federal Reserve might start throttling back its emergency support.

Copper

Many banks say the rally has further to run, particularly for copper, which will benefit from rising investment in new energy sectors. Copper is at the highest in a decade, fueling bets it will rally further to take out the record set in February 2011. Steel demand is surging as economies chart a path back to growth just as the world’s biggest miners have been hampered by operational issues, tightening ore supply.

“The long-term prospects for metals prices are ‘too good’ and point to higher prices in the next few years,” said Commerzbank AG analyst Daniel Briesemann. “The decarbonization trends in many countries, which include switching to electric vehicles and expanding wind and solar power, are likely to generate additional demand for metals.”

Trading house Trafigura Group and several major Wall Street banks including Goldman Sachs Group Inc. and Bank of America Corp. expect copper to extend gains.

Copper rose as much as 1.6% to $10,108.50 a ton on the London Metal Exchange before trading at $10,080 as of 4:07 p.m. in London.

Bloomberg

Iron Ore

Benchmark spot iron ore prices rose to a record, while futures in Singapore and China climbed.

The boom comes as China’s steelmakers keep output rates above 1 billion tons a year, despite a swath of production curbs aimed at reducing carbon emissions and reining in supply. Instead, those measures have boosted steel prices and profitability at mills, allowing them to better accommodate higher iron ore costs.

Spot iron ore with 62% content hit $201.15 a ton on Thursday, according to Mysteel. Futures in Singapore jumped as much as 5.1% to $196.40 a ton, the highest since contracts were launched in 2013. In Dalian, prices closed 8.8% higher.

Erik Hedborg, Principal Analyst, Steel at CRU Group commented: “Recent production cuts in Tangshan have boosted demand for higher-quality ore and prompted mills to build iron ore inventories as their margins are on the rise. Iron ore producers are enjoying exceptionally high margins as well, around two thirds of seaborne supply only require prices of $50 /dmt to break even.”

China

Still, some analysts including Commerzbank’s Briesemann expect a short-term correction as metals become detached from fundamentals. There’s also a risk that China could engage in policies that may cool demand for iron ore and copper.

The metals rally has boosted concerns about short-term Chinese demand. Some manufacturers and end-users have been slowing production or pushing back delivery times after costs surged, while weaker-than-expected domestic consumption has opened the arbitrage window for exports.

Tin climbed as much as 2% to $30,280 a ton on the LME, boosted by rising orders for the soldering metal. Tin is at the highest since May 2011, with a 48% gain this year making it the best performing metal on the LME.

 


 

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