Nucleus weath david lewellan jones today in plodcast is super bear on io priceThis is the bloke that suggested the USA Navy would deploy aircraft carriers off the WA coast to prevent Australia from exporting iron ore to China during a Taiwan crisis.

Sensational headlines lapped up by the likes of news.com.au!

Here's a prediction - Dow Jones will turn bearish & fall below 30000. Wait long enough & I'll be correct.

I prefer to listen to JBL below - any analyst that looks like that can't be wrong!!
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Falling commodity price not the death knell for iron ore miners
Aug 13, 2021 – 4.34pm

The major iron ore miners share one defining quality that makes them wildly attractive to income investors, despite the price of the bulk commodity falling more than 30 per cent since it peaked in May: it's still raining cash in the Pilbara.

While the record dividends set to be paid this earnings season are unlikely to be matched again as the price of iron ore pulls back, investors say there is plenty of riches left.

“I don’t think it’s the end of the iron ore boom,” said Tribeca Investment Partners Alpha Plus Fund lead portfolio manager, Jun Bei Liu.

“Iron ore prices, they’re still really high and it has come off quite rapidly but the disruption remains. The supply side is still yet to catch up, so demand is there even if there is a bit of a slowdown.”

The price of iron ore fell 1.5 per cent to $US162.96 a tonne on Thursday according to Fastmarkets MB, having hit a four-month low on Tuesday, to be down 31.4 per cent from the record $US237 achieved in May.


Tribeca’s Jun Bei Liu says the iron ore boom isn’t over. Jessica Hromas

On Thursday, Rio Tinto traded ex-dividend, the date upon which a security trades without the right to its declared dividend -- in this case a record $US9.1 billion distribution.

Its single-day decline of 6.9 per cent was larger in dollar terms than the value of the dividend, however.

“There’s a lot of income investors in these stocks and so they tend to run aggressively into the yield and the after it goes ex-dividend, they’ll go to something else,” said Ms Liu. “But these stocks will recover.”

The heavy fall in iron ore prices in the last few weeks suggests the major iron ore miners won’t be able to pay out as strong a dividend in the next half.

“Iron ore prices are falling as China appears to be enforcing its target of steel production being flat year-on-year in 2021,” UBS analyst Myles Allsop said in the broker's research.

"The 10-day CISA data shows daily pig iron production is down 6 per cent in July versus June. Key steel producers have also announced plans to cut production in the second half. This has resulted in mills destocking and iron ore prices falling sharply in a thin spot market.”

But brokers are betting the sharp fall is only temporary, saying the price should remain supported through the end of the year.

“We note iron ore exports have not yet lifted materially from Australia or Brazil although producers’ guidance implies supply will lift [around] 60 million tonnes in the second half of 2021,” said Mr Allsop.

China’s steel curtailments are expected to be targeted in the fourth quarter, when demand seasonally slows and air quality matters. UBS expects prices to stabilise in September-October before falling back in 2022.

Morgan Stanley is forecasting the price of iron ore will drift lower slowly but remain well above $US100 a tonne through next year.

“Beyond the current demand deliberations, we think the market will start focusing more on supply, as the fourth quarter is likely to see the strongest shipment volumes of the year. This seasonal supply pressure could be the starting point for the next, supply-driven leg down,” said Morgan Stanley analyst Marius van Straaten.

“Vale’s production recovery has been far from smooth so far, and we expect a relatively slow normalisation of the iron price through 2022, hitting the $US100 a tonne level only by the fourth quarter of 2022 and staying well clear of the $US70 a tonne cost support level.”

Tribeca’s Ms Liu said even following its 30 per cent decline, the price of iron ore was attractive for producers.

“Even at current prices, the next 12 months still look pretty good for the major iron ore miners,” said Ms Liu. “It’s hard to see commodities not being desired as the global economy recovers.”

Tellingly, major miners have remained resilient despite the commodity price falling. While iron ore is more than 30 per cent off its record high, BHP Group is less than 3 per cent off its record level, and Rio Tinto only 12 per cent even after trading ex-dividend.

“If you look at these big miners, they’ve held up really well despite iron ore falling,” said Ms Liu. “These miners are still paying enormous dividends and where else are you going to get income like that in this market?”