Iron ore price, page-637

Yeah I think they (Chinese mines) will struggle to survive at $80 let alone $70. New aust and Brazil supply (ie Roy hill and s11D) were never the key variable - china 2017 1Q yoy increase was ~30MT alone and That's pretty much Roy hills current full year capacity (as per their feb release) and just got eaten up in one quarter lol. Chinese mine production (restart or refuse to close) is still the key variable in my view.

Notwithstanding the fact that the last round of environmental protection inspection just ended last Friday and found majority of the companies and firms were in violation (frank mentioned this earlier too), I just don't think they can economically survive if iron ore price stay in the $70s.

I don't know why the sudden price movement last week given march was a record month or have any insight into Chinese govt policy. But what blackeyes suggested makes sense. Let market forces do the work, which is actually what happened to coal (late last year china set a price level for domestic coal producer to sell to domestic power companies which was at the time lower at spot but still very good so good mines can make money and inefficient mines shut down on their own, and thermal coal prices have been around that level ever since).

Lastly, let's put the "ever increasing low cost seaborne supply" into perspective - Roy hill is currently producing at ~30mtpa and s11d came online in nov(?) and expected to reach 50mtpa capacity by year end so together in 1Q 2017, I'm going to be generous and say they produced ~17-20Mt. China import for 1Q increase was ~30Mt. Lol. So I really don't think the recent drop in iron ore price is caused by the new seaborne supply.

So let's see how long the reopened/refused to close Chinese mines can last. Once they started to drop off, inventory level will drop quite quickly too.