Chinas insatiable demand for steel combined with a slow recovery in Brazilian supply after a series of outage events has lifted the price of iron ore to a six-year high of 130 a ton but that could be as good as it gets.Get A Quote
Chinas insatiable demand for steel combined with a slow recovery in Brazilian supply after a series of outage events has lifted the price of iron ore to a six-year high of 130 a ton but that could be as good as it gets.
The iron ore price rise to a level last seen in early 2014 continues a process which has seen the steel-making material consistently outperform investment bank forecasts.
The expectation for much of the past six-to-12 months has been for the iron ore price to fall back into the 80t range thanks to a combination of Brazil restoring exports and modest steel demand growth in China.
Chinese demand for steel is keeping the iron ore price high for now. Photographer Nelson . ChingBloomberg
Both of those predictions have proved wrong with a supply shortage and stronger-than-expected Chinese steel demand driving iron ore higher.
But the next few weeks could see a turn or as Morgan Stanley described the iron ore market nearing the summit a view shared by the equally well-connected analysts at another bank Goldman Sachs.
Neither bank is forecasting a dramatic decline and perhaps even a final upward leg before a long slide kicks in.
There is also a warning in the latest research that the share prices of most iron ore miners have moved well ahead of the market for the commodity with some of the better-known producers such as Fortescue Metals downgraded to neutral or sell.
Morgan Stanley said a higher for longer scenario was its new base case for iron ore driven by a slower unwinding of the current tightness in the market through next year.
Iron is vital to the global economy because its an essential ingredient in making steel. Overall about 98 of the iron mined each year goes into the production of steel. That metal is a crucial building block of global infrastructure like bridges buildings and pipelines. Its also in a variety of other items like cars ships appliances tools and wind turbines. In 2018 about 51 of the steel produced went into buildings and bridges with another 12 used to make automobiles.
Steels vital role in building the backbone of the global economy is why iron is the mining industrys largest metals market by volume as industries demand more of it than copper or aluminum. Overall iron typically ranks as the third biggest commodities market by dollar value behind oil and gold.
Given the importance of iron to the global economy its an essential metal for investors to understand. This guide will walk them through the key things they need to know about this sector.
Given the vital role iron plays in building the global economy many of the worlds largest mining companies produce this raw material. In addition to that some major integrated steel producers also mine and process iron ore. Here are the five biggest players in the iron market as ranked by theirmarket capitalizationa companys total available shares multiplied by its stock price
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Investors who are interested in the iron industry need to understand the language that mining companies use to communicate with investors. That starts with getting to know some of the metrics that the sector uses to measure its performance. Three of the most important ones for investors to know are
EBITDAEBITDA is an acronym that stands for earnings before interest taxesdepreciation and amortization. Its a non-GAAPmetric which iron ore miners use to provide their investors with the underlying earnings-generating capability of their ore business. They use this metric because they typically record largedepreciation expensesas they deplete a mines reserves which reduces their reportednet income. Because of that iron ore miners often seem like theyre not making much money which might not be the case.
Economic growth is the lifeblood of the iron industry. As the global economy expands it drives demand for more steel to construct new buildings bridges vehicles and appliances. Because of that one of the biggest potential headwinds facing the sector is an economic slowdown. If the global economy goes into recession it will cause the demand for steel to decline which will negatively impact the price of iron ore. That would cut into the profitability of companies that mine that metal likely causing their stock prices to plunge.
While countries all around the world use iron and steel China is by far the biggest consumer. In 2017 that one economy used 45 of all the steel produced. Because of that if Chinas economy slows down it would have an outsized impact on demand for steel and the iron ore market.
Several other factors can also impact iron demand including rising interest rates and a slowdown in a key steel-consuming industry like automotive. Rising interest rates for example make it more expensive for companies to borrow money which can cause them to invest in fewer building projects thus impacting steel demand. Meanwhile the U.S. automotive industry accounts for 27 of the countrys demand for steel. As such when fewer American consumers are buying cars it can negatively impact the iron sector.
FMG is an Australian iron and nickel mining company that is among the top 10 in the world. To open the plan Andrew Forrest met President Joko Widodo September 3 2020. During the meeting the President immediately assigned the Coordinating Minister for Maritime Affairs and Investment Marvest Luhut Binsar Panjaitan.
The MIGA-guaranteed investment will be used for the completion of key studies preceding the development of the Nimba Iron Ore Mine a high-grade open pit iron ore mine in the Nimba Mountains in the Nz233r233kor233 Region in southeastern Guinea approximately 800 km from Conakry.
Back in 2014 iron ore export revenues equated to 75 billion providing a major source of income for the country. In 2010 the metal outranked coal as Australias most valuable export by over .
Abdul Malik Bangura Sierra Leone telegraph 18 July 2020 As first Shipment expected in October to December 2020 Kingho Investment says it will employ over 2000 Sierra Leoneans to revamp iron ore mining in Tonkolili District. At the peak of a global pandemic which has ravaged economies of all countries across the world Sierra Leone
Iron ore prices have soared to multi-year highs this week as Chinese government stimulus spursinfrastructure building boosting prices of the commodityeven amid a global pandemic.
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