Iron Ore future pricing trends – Expert speaks : Vaman Kumar, Nordbell Commercial Limited

Vaman Kumar, an industry expert associated with Nordbell Commercial Limited elaborates upon the impact of the proposed increase in production of iron ore by Australian mining majors.

Last week the Bureau of Resources and Energy Economics (BREE) in Australia slashed iron price forecasts for 2014 last month. Moreover, a further drop is also predicted in 2015 when mining companies like BHP Billiton Ltd and Rio Tinto Group increase their output as has been announced.

As a result of the price slash, the average contract price for Free On Board (FOB) Australia iron ore is set to decline from its previous forecast of $119 per ton to $110 per ton (a 7.5% reduction). BREE forecasts that iron ore exports would drop 3% to 631m tons as opposed to its previous forecast of 650 m in December. According to the industry expert Vaman Kumar “The prices of iron ore are in the retracement period from its high.”

In another significant development, producers of iron ore in Australia – Fortescue Metals, BHP Billiton and Rio Tinto are increasing shipments to China. According to Vaman Kumar “Shipments to China are likely to top half a billion tons. It is very likely that global supply will outpace global demand”.

Iron ore output of Rio Tinto alone is scheduled to reach a capacity level of 290 million tons a year before June 2014. Following the same trend, Fortescue is targeting a 155-million-tons-per-year run rate over the next month as against the 100 million tons one year ago.

Due to the increased availability of supplies from mines starting up in Australia in 2014, iron ore prices are not expected to recover to the high levels witnessed in 2013. However, the FOB Australia spot price is predicted to be an average of $110 per ton for the full year. Also, BREE is apprehensive of persistent downward pressure on the price of iron ore over the next few years, as new mines continue to come up. The body projected an average spot price of iron ore in 2015 to be around $103 per ton and also envisages the possibility that new capacity could see the iron ore price drop to $87 per ton by 2019.

About Vaman Kumar

Vaman Kumar, is an industry expert in the field of international trade and global commodity trade especially in the field of iron ore trading. Vaman Kumar has been associated with Nordbell Commercial Limited and his interests include Metals, Minerals and Energy in Commodity Trading, International trade, Banking, Finance and Credit and Risk Management.

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Imported Thermal Coal Delivery in South

February 24, 2014 – Market sources reported two imported trades of mid-calorific value to deliver thermal coal in South China during Friday’s trading session, which supported CFR prices. The Fenwei/Platts CFR South China price was evaluated on Friday at $76.40/mt basis 5,500 kcal/kg NAR. However, the price excluded 17% VAT, and was 10 cents higher than on Thursday. On the other hand, CFR South China price for Platts only remained steady for the day at $76.50/mt CRF.

One of the trades on Friday was for Capesize, to arrive in March, of Australian 5500 kcal/kg NAR thermal coal struck at a price between $76.25 and $76.50/mt CFR South China. The other import trade was for another cargo, to arrive in April, from Australia and thermal coal calorific value at $77/mt, reported the Chinese traders. The offer and bid prices for cargoes from South Africa and Australia had further narrowed during the trade week, demonstrating a tight band of $76-77/mt CFR South China. 

Source: Imported Thermal Coal Delivery in South

Low Grade Iron Ore Trading - A Positive Impact on Economy

Low-grade iron ore is giving the steel industry something to rejoice in a time when the ban on mining the high-grade variety was giving the mining giants sleepless nights. To prove the same, an expert associated with Nordbell Commercial Limited, Vaman Kumar has compiled and shared recent data and given his expert opinion to put light on the matter.

According to Vaman Kumar, the recent rebounding of the steel market boosts demand for medium to low-grade ore related to spot markets. This in turn lends support to lower grade spot prices and encourages offers in the market actively traded.

Why low-grade iron ore is traded?

Low-grade iron ore has helped the steel industries get the much-needed raw material at a time when high-grade ore varieties seem to be a victim of over mining in most rich belts. Vaman Kumar states, “The modern mining scenario leaves little scope for finding optimal reserves of high-grade iron ore. Naturally, the low-grade varieties are emerging as the leading choice among the steelmakers everywhere; boosting trade.”

For more information visit: Vaman Kumar Nordbell