approval, page-5

Harlee, I just can't see it happening. With all that is going on in and around the IO markets, I just can't see a huge response being maintained.


Iron ore's spot price takes dive
Jamie Freed
April 7, 2009
THE negotiating position of Australian iron ore producers seeking to settle a benchmark price with Asian steel makers has weakened, with the spot price of iron ore plunging to its lowest since July 2005 and exports at their lowest since November.

The spot price of iron ore, including about $US7 ($A9.80) a tonne for shipping, is about $US63.50 a tonne — the same low it hit during a market collapse in late October, which ties for the lowest since July 2005.

It implies the benchmark price will fall by about 40 per cent this year — the lower end of analyst expectations of a 30 per cent to 40 per cent fall.

Fortescue Metals last week said it was already selling its ore at a 30 per cent discount that would be adjusted to take account of the actual settlement when it occurred.
Industry experts expect BHP Billiton will settle the benchmark price this year because Brazil's Vale, the traditional price-setter, has indicated it will let its Australian rivals take the lead. And Rio Tinto's controversial deal with Chinalco means it is unlikely to set the price.

The iron ore market strengthened between December and mid-February, but the price has been falling since as demand from smaller Chinese steel makers restocking inventories proved to be short-lived.

UBS said export statistics showed Australian miners had shipped 23.3 million tonnes of iron ore in February, down 13 per cent from January and the lowest since exports fell to a 20-month low of 19.4 million tonnes in November.
Heavy rain in the Pilbara is likely to have had some effect on the February figures, which were 14 per cent higher than February last year, when exports were unusually low because of cyclones.

March and April export figures could be even worse than the February results, which point to weaker demand.
Although China purchased more Australian iron ore in February than it had the previous year, exports to Japan, Korea and Taiwan fell compared with last February. The export figures to Japan were particularly weak.

In the coal market, semi-soft coking coal exports fell 41 per cent to 1.9 million tonnes compared with January, reaching by far the lowest level since at least 2005. Exports fell to most regions, excluding India. Hard coking coal exports rose 14 per cent to 5 million tonnes in February compared with January but remained at the lowest level since at least 2005.

Thermal coal exports fell 18.7 per cent to 10.5 million tonnes in February compared with January, with Taiwan proving a particularly weak market. At the Newcastle port, thermal coal exports rose slightly in March compared with February, but Japan's share of the exports fell to 54 per cent from 64 per cent in February.