· Metals: Copper +0.9% to $4.52lb, iron ore -3.1% to US$195/t·...

· Metals: Copper +0.9% to $4.52lb, iron ore -3.1% to US$195/t

· Energy: Brent crude +1.6% to US$75.9/bbl, WTI +1.7% to US$73.6/bbl

· Keyovernight stock moves: BHP LND +2.0%, Rio Tinto LND +2.6%, S32 (LDN) +1.7%, AAL +5.4%, GLEN +0.8%, Vale -0.3%, AA +3.0%, Shell +3.8%, BP +1.3%, XOM +1.2%, Chevron +1.4%, COP +0.6%

· GlobalIndices: S&P 500 +0.42%, DOW +0.44% & FTSE +0.88%

• FMG posted a strong finish to FY21 with June Q shipments and price realizations ahead of expectations while costs are rising
• However, FY22 guidance incl. higher sustaining capex sees our PO reduced from $30/sh to to $27/sh while we reiterate our Buy
• FMG offers 18% potential return (inc. 14% DY) with the next catalyst a final DPS of A$2.15/sh and positive earnings revisions
(BoA)

Spot iron ore prices have dropped $27.30/dmt since July15 to reach $195.00/dmt on July 29, as demand for iron ore from Chinese millsplummeted with the implementation of steel production controls for the secondhalf of the year. Prices were down $6.25/dmt on the day. This is the first timeprices have fallen below $200/dmt since the end of May. Fundamentals have changed since the end of May, when iron ore prices rose sharply on firm downstream demand, which kept prices above $200/dmt. Despite the volatility in the market since June, prices crept higher, interspersed with dips in the market, before freefalling starting on July 15. High iron ore prices supported by high steel prices have come off as end-users were heard no longer chasing productivity. With production cuts, while mills were heard favoring discounted medium grade fines and low-grade fines, overall demand for iron ore has weakened as pig iron production is expected to fall. (Platts)

Vale SA flagged potential production setbacks on Thursdayamid temporary issues at multiple iron ore mines, but executives said theBrazilian miner was still on track to ramp up output in the second half of theyear. In a presentation released on Thursday morning, the world's secondlargest iron ore producer revised down its guidance for year-end productioncapacity to 343 million tonnes per annum from 350 million tonnes previously. Among the issues holding back production, Vale said, are licensing issues at its Sistema Norte and Mutuca assets in Brazil, as well as temporary restrictions on the disposal of mining waste at its Itabira mine. (Reuters)

Rio Tinto shares hit record highs on Thursday asinvestors dived into the stock on the back of its record $12.4bn interimdividend splash this week, but analysts warned the iron ore major has a way togo before it can return to its former operational heights. Rio Tinto touched a record high of $137.33 before closing at $134.17, up 1.47 per cent on Thursday on the back of its half-year results the day before, when chief executive Jakob Stausholm said Rio would deliver a $US9.1bn return to shareholders, or 75 per cent of its underlying earnings for the period. But, while resources analysts welcomed the massive shareholder payout, they warned shareholders the rivers of cash being generated by Rio’s iron ore division masked underlying issues at the company. (The Australian)

Fortescue Metals Group shares hit record highs onThursday in anticipation of a bumper dividend after the company closed thefinancial year with a flourish, finishing June with $9.4bn in the bank. Fortescue released its June quarter production report on Thursday, saying it closed the financial year with a net cash position of $US2.7bn ($3.6bn), after adding $US3.3bn to its cash balance in the June quarter alone as the company sailed to the close of the financial year with strong quarterly shipments of 49.3 million tonnes of iron ore from its Pilbara operations. Fortescue shares touched a record high of $26.50 in intraday trading on Thursday, before closing at $26.30, up 1.90 per cent, as investors positioned ahead of what is expected to be a bonanza dividend season from Australian iron ore miners. (The Australian)

ArcelorMittal shares jumped 4% as the company reportedits highest profits since 2008, as the world’s largest steelmaker benefitedfrom a global economic upswing. The Luxembourg-based group said that profits rose sevenfold in the second quarter to $5.1bn, ahead of analysts’ estimates of $4.67bn. Steel markets have rallied this year in the US and Europe, helped as the construction industry rebounds from the pandemic and governments step up infrastructure spending. (Financial Times)

Rising cost pressures loom as a challenge to the future profitability of the world’s top iron ore miners, even as they post historic returns on the back of booming demand from Chinese steelmakers. Fortescue Metals Group Ltd. shipped a record amount of iron ore in the June quarter as it looked to cash in on the surge in prices to an all-time high. But the group also reported a 2% increase in operating costs due to inflation and Covid-19 safeguard measures, and it’s already warned that its key Iron Bridge project could cost nearly $1 billion more than its original estimate. A shortage of skilled labor is becoming an increasing problem for the Western Australian mining sector as the country’s international border closure, as well as interstate travel restrictions due to rising virus cases, limit the flow of workers. The industry was engaged in “a bidding war” for top talent, according to a survey from the Chamber of Commerce and Industry WA earlier this week, with 81% of respondents saying they had been outbid in the hunt for new hires. (Bloomberg)