The iron ore price above USD 150 in 2015?Here isa video interview with Vale’s CFO which is worth listening to (6 min. 14 sec.):
https://video.ft.com/v/1040997088001/Iron-ore-highs-for-5-years-Vale-CFO
Here isft.com's extract from the interview:
Iron orehighs for 5 years - Vale CFO
Jul 62011 Guilherme Cavalcanti, chief financial officer of Vale, the world's secondlargest mining group and biggest producer of iron ore, says the price of thecommodity will remain above $150 a tonne for at least the next five years. Hetells Jack Farchy, commodities correspondent, that demand from China, a lack ofskilled workers, and issues over environmental permits are driving the highcost.
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Frommbironoreindex.com:
Spotiron ore prices will remain over $150 per tonne to 2015, Macquarie says
July 06,2011
Theprice of seaborne iron ore on the spot market will remain above $150 per tonneuntil at least 2015, Jim Lennon, analyst at investment bank Macquarie tolddelegates at the Iron Ore Trading World conference in London.
Source: https://www.mbironoreindex.com/Article/2861016/Spot-iron-ore-prices-will-remain-over-150-per-tonne-to-2015-Macquarie-says.html
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DJ IronOre Supply Will Continue To Disappoint-Macquarie 7/6/2011
LONDON (Dow Jones)--Iron ore supplies are setto disappoint with Chinese production in particular continuing to decline, ananalyst at Macquarie Securities Group said Tuesday.
Jim Lennon told Terrapinn's iron oreconference in London that the main supply problems lie in securing financing,issues building out infrastructure, delays due to environmentalpermitting--particularly in Brazil and Africa--and depleting grades, especiallyin Australia.
'Iron ore looks set to remain fundamentallytight towards the end of the decade,' he said.
Chinese domestic iron ore output is set tocontinue to decline from around 333 million metric tons currently, based on a62% iron ore content, to around 202 million tons by 2016.
'Apparent Chinese iron ore productionrebounded in 2010 as prices recovered, but remains well below peaks,' Lennonsaid. 'Declining grades, rising costs and environmental concerns act as aconstraint. Chinese iron ore output is pretty flat at current prices,' henoted, adding that around 100 million tons of output that was produced beforeprices fell during the downturn remains out of the market.
China is a net buyer of iron ore to makesteel, although produces a certain amount domestically.
But Lennon said China's government doesn't likethe impact of iron mining as a rule, due to a lack of proper corporate socialand environmental responsibility by Chinese miners. 'The government has nowstarted heavy taxing, and costs are rising,' he added.
Chinese iron ore output is already high cost,and rising. Lennon said costs have risen from around $85/ton in 2008 to around$136/ton currently, rising to $150/ton next year and $161/ton in 2013.
This isin part due to rising producer price inflation, a stronger Chinese currencyagainst the dollar, rising labor costs and declining grades and output there,he noted.
'China will have to scour the globe for morenon-traditional supply,' Lennon said. 'China's need to diversify highlights howtight the iron more market is.'
Source: https://www.guococap.com/NewsDetail.asp?StoryID=c-20110705DN004129
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As perJuly 7, 2011 (62 % Fe CFR China):
Spotprice iron ore: USD 169.76 per tonne (according to MBIO Index)
Swapprice 2012: USD 155.95 per tonne
Swapprice 2013: USD 143.10 per tonne
Sources:
https://www.mbironoreindex.com/
https://www.sgx.com/wps/wcm/connect/mp_en/site/products/asiaclear/commodities/prices?presentationtemplate=design_lib/PT_Printer_Friendly