Ann: Annual General Meeting 2021 - Presentation, page-61

But wait ... there is more (just ignore/don't respond to paid fbbf troll!) ... as one of the best analysts, former geologist, stockbroker and now independent thinker is confirming that:

Market Ructions

Reports of iron ore’s demise may have been premature with improving economic data coming out of China.

GDP growth in October 2021 came in at a better-than-expected YoY bottom of 3.3% (or 4.9% 2Y CAGR) in 4Q21 and rebounding to 5.5% in 2022 according to Morgan Stanley (China and the Miners, November 2021).

The property market is also looking a little healthier after a sharp contraction in property sales and construction starts over CY 2021 (figure 1).

Property and infrastructure demand rose 3.5% YoY in October (+3.1% September), however PMI contracted to 49.2, from 49.6 in September 2021. The PMI however rose to 50.1 last month for the first time in three months reinforcing the more positive manufacturing outlook.

The Chinese government’s response to the soft property market is a loosening of property policy to bolster demand.

It appears the government is also about to ease production cuts, with My Steel suggesting that Chinese steel mills are restocking ahead of a restart sometime this month after running down steel inventories (figure 2).

This is also likely to coincide with an increase in pig iron production which is projected to rise by around 37,000 tonnes per day.

The Dalian iron ore price jumped over 6% on Tuesday to just over US$103/tonne.

The January contract was also around 2.5% higher at US$95.75, still in backwardation but higher, nonetheless.

The supply side also remains tight with Vale forecasting production in the range of 315-320 million tonnes this year which is on the lower end of their guidance of 315-335 million tonnes.

The other variable to watch out for, of course, are disruptions to shipping as Australia enters the wet season over November to March.

RFC Ambrian published an updated report on copper as a follow up to their ‘Copper M&A – The Cupboard is Nearly Bare’, that was published in November 2018.

Well not surprisingly, figure 4 confirms what we know about declining exploration over the last 9-10 years with the majority of the world’s largest copper projects located in regions subject to civil and political unrest (figure 5).

Put this together with the EV demand and you have set the scene for a bull market that could run for 5-10 years or more...
GLTArealH

Iron ore – back in black!