World stock markets take beating amid China’s market meltdown
World stock markets took a beating Monday as China’s main index fell 8.5 percent--the largest since February 2007 -- driven by growing fears that China’s economy is slowing more than many investors had anticipated.
"Anybody with a pulse was nervous when the market opened. We're still going to see significant price swings both up and down before the day ends today," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
"The only thing that's certain is the volatility is going to continue in the short term, given the magnitude of the moves that we've already had in the last four days."
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The Dow Jones nosedived minutes after the opening bell, falling 1,089 points--the single largest drop since October 2008, when the financial crisis was in full effect.
According to Bloomberg, the Dow’s closing point loss for the day was 586.53 points, or 3.56 percent, to 15,873.22. It’s the eighth worse one-day point loss in history and worst daily point decline since August 8, 2011.
The drop in China’s equities essentially wipes out all their gains for 2015 and analysts and media were quick to label today’s market free fall as the Chinese “Black Monday.”
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For the mining industry, few stocks were immune to the collapse. The biggest fallers were Glencore -- falling eight percent -- and BHP Billiton and Anglo American, both losing more than seven percent of their value.
Stocks closed down more than eight percent in Shanghai and more than four percent in Tokyo. Markets in London, Paris and Frankfurt were all down more than four percent. London’s FTSE 100 (FTSE), ended down 4.7 percent for its tenth straight decline – its worst run since 2003.
Global iron ore production to recover by 5.1% in 2021
Global iron ore production fell by 3% to 2.2bnt in 2020. Global production is expected to grow at a compound annual growth rate (CAGR) of 3.7% to 2,663.4Mt between 2021 to 2025. The key contributors to this grow will be Brazil (6.2%), South Africa (4.1%), Australia (3.2%) and India (2.9%). Key upcoming projects expected to commence operations include South Flank in Australia (2021), Zulti in South Africa (H2 2021), Serrote Da Laje in Brazil (H2 2021) and Gudai-Darri (2022), according to GlobalData, a leading data and analytics company.
Vinneth Bajaj, Associate Project Manager at GlobalData, comments: “Declines from Brazil and India were major contributors to the reduced output in 2020. Combined production from these two countries fell from a collective 638.2Mt in 2019 to an estimated 591.1Mt in 2020. The reduced output from the iron ore giant, Vale, was the key factor behind Brazil’s reduced output, while delays in the auctioning of mines in Odisha affected India’s output in 2020.
“Miners in Australia were relatively unaffected by COVID-19 due to effective measures adopted by the Australian Government, while a speedy recovery in China led to a significant 10.4% increase in the country’s iron ore output.”
Looking ahead, the global iron ore production is expected to increase by 111.3Mt to 2,302.5Mt in 2021. Rio Tinto is expected to produce up to 340Mt of iron ore, while BHP has released production guidance of 245–255Mt, supported by the start of the Samarco project in December, which is expected to produce between 1–2Mt.The company has retained its guidance for Australian mines at 276–286Mt on a 100% basis, due to scheduled maintenance work at its ore handling plant and tie-in activity at the Area C mine and South-Flank mine.
Bajaj added: “The remaining companies are expected to produce more than 600Mt of iron ore, including FMG, whose production is expected to range between 175–180Mt supported by its Eliwana mine that commenced operations in late December 2020, and Anglo American, which is expecting to produce between 64–67Mt. Vale is expected to resume 40Mt of its production capacity, taking its overall production capacity to 350Mt in 2021, with production guidance of 315-335Mt.”