Will PLV even be profitable if this palys out ? Iron Ore Rout...

Will PLV even be profitable if this palys out ?


Iron Ore Rout Seen Deepening by CLSA to $75 as Supply Expands

By Jasmine Ng  Sep 2, 2014 2:27 PM GMT+1000  
Iron ore will drop to $75 a metric ton in the second half of next year as rising supplies from Australia and Brazil worsen a global glut and the slowdown inChina’s property market curbs demand growth, said CLSA Ltd

The commodity used to make steel will average $80 a ton in 2015, down from an earlier full-year estimate of $85, and $75 a ton in 2016 and 2017, down from estimates of $80 for both years, according to a report from analyst Ian Roper dated yesterday. By quarter, prices were seen at $90 in January-to-March next year, $80 in the second quarter and $75 for the final two three-month periods, according to the report.

Iron ore lost 35 percent this year as producers including Rio Tinto Group (RIO) expanded low-cost supplies, pushing the market into a glut. New-home prices in China, which buys about 67 percent of seaborne ore, fell in July in almost all cities that the government tracks, boosting concern that economic growth is faltering. While demand for iron ore was sluggish, supply is spectacular, Roper wrote in the report for the unit of Citic Securities Co., China’s largest brokerage by market value.

“The oversupply situation is only going to worsen over the next few years,” said Singapore-based Roper. The property-market slowdown in China “looks increasingly serious for steel demand next year,” he said.
Ore with 62 percent content at the Chinese port of Qingdao dropped to $87.62 a dry ton on Aug. 29, the lowest level since October 2009, according to Metal Bulletin Ltd. The price, which was at $87.79 a ton yesterday, averaged about $94 a ton this quarter compared with $121 in the first three months of 2014.

“For the first time in over a decade, the need to eliminate iron ore supply, rather than incentivize it, is determining prices,” said Roper. About 200 million tons of capacity may exit the market as prices drop toward $80 a ton in the first half of next year, he said.


http://www.bloomberg.com/news/2014-...eepening-by-clsa-to-75-as-supply-expands.html