Iron Ore Prices

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Excess of iron ore ends its bull run
THE AUSTRALIAN JULY 01, 2014 12:00AM
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Barry Fitzgerald

Resources Editor
Sydney
THE 2014 financial year will go down as the year in which the great bull run in iron ore prices came to an end.

Unlike the rest of the mineral commodities — with exception of oil, which has its own special set of geopolitical drivers affecting its price — iron ore was the last to be holding out against the broad decline in commodity prices that got going in 2011.

That broad decline has dramatically altered the capital expenditure plans of the mining sector, with the previous focus on growth to feed the 10-year surge in demand from China replaced by a new era of capital austerity.

Until FY2014 came along, iron ore — Australia’s biggest export earner — was swimming against the tide, continuing to deliver elevated prices and returns for the big three of the local industry, Rio Tinto, BHP Billiton and Fortescue.

But as the year unfolded, the price began to wither.

From a high of $US142.80 a tonne in August last year, iron ore has since fallen to below $US100 a tonne, and it finished the financial year at $US94.90.

The price so far this calendar year has averaged $US112 a tonne for 62 per cent iron material, according to The Steel Index. The revenue difference between the year-to-date average and last year’s $US135 a tonne average is $US18.4 billion, with tax and royalty receipts hit accordingly.

While a slowdown in demand from China’s steel sector is a factor, much of the FY2014 fall for iron ore is of the industry’s own making.

Massive supply increases — spawned by the expansions that were locked in when iron ore peaked at $US191 a tonne in early 2011 — have dramatically altered the supply/demand balance.

The local industry’s great hope now is that China’s own iron ore production gets closed in response to the weaker prices. City for one believes that will be enough for prices to recover to an average of $US100 a tonne this December quarter.

Despite the price gloom around iron ore, FY2014 also goes down as the year in which Gina Rinehart managed to secure $US7.2bn in debt financing for the $US10bn Roy Hill iron ore project.

But it is expected to be the last of the big Pilbara iron ore developments for the foreseeable future.

Price weakness during the financial year was not restricted to iron ore. Both metallurgical and steaming coal prices weakened substantially, again forcing a drastic pullback in expansion planning and threatening the existence of the higher cost producers.

On a brighter note, the shell-shocked gold sector drew some comfort in the ability of the yellow metal to end the FY at $US1314 an ounce, a handy 5 per cent increase for the year and giving those miners that can produce at an all-in cost of less than $US1000 an ounce hope that equity investors might yet return to the sector.

Elsewhere the nickel producers enjoyed better prices, with the price for the stainless steelmaking ingredient taking off in the second half of the financial year.

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Atlas in world of pain after discounting iron
THE AUSTRALIAN JULY 11, 2014 12:00AM

Paul Garvey

Resources Reporter
Perth
SHARES in Atlas Iron have fallen sharply after the miner revealed that worsening market conditions had forced it to accept increased discounts on its iron ore.

The news took the gloss off the announcement that Atlas had reached its production target early.

Atlas said it had shipped a record 3.1 million tonnes of iron ore during the June quarter from its suite of Pilbara mines, lifting the company to its annual targeted production rate of 12 million tonnes ahead of schedule.

But the stock was sold down heavily, shedding 5.3 per cent to be the worst-performing stock in the S&P/ASX200 index, as investors focused on the negative pricing outlook.

Mr Brinsden said that the iron ore market had softened on the back of significant production growth from the major miners coupled with “credit constraints” in China. As a result, prices had fallen and discounts on Atlas’s iron ore had increased over the first half and in the past three months in particular.

“We are confident that the supply and demand balance for iron ore and the ‘value-in-use’ differential between products of differing grades, means both price and product discounts have likely overshot their natural range,” Mr Brinsden said.

“While it is good to see some stability emerge in iron ore markets in recent weeks, we will continue to focus on those matters we can control.”

The June production lifted total shipments for the 2014 ­financial year to 10.9 million ­tonnes, up 47 per cent.

The benchmark iron ore price fell to a low of $US89 a tonne late last month, capping a 34 per cent slide since January. It has since recovered to around $US96.60 a tonne.

Atlas shares fell more than 50 per cent from their January high to as low as 56.5c, and last changed hands at 62c.

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Oversupply threatens resources sector
• THE AUSTRALIAN
• JULY 22, 2014 12:00AM

Rowan Callick

Asia Pacific Editor
Melbourne

Australian dollar chart Source: TheAustralian
THE chief challenge for Australia’s growth-driving resources sector is coming not from demand but from potential oversupply, warns HSBC’s co-head of Asian economic research, Frederic Neumann.
He also told The Australian during a visit to Australia yesterday that China and Japan, Australia’s top economic partners, were facing similar challenges — their leaders are determined to restructure their economies but they are facing tough conservative opponents in their countries’ public and private sectors respectively.
“China’s demand for commodities will continue to grow robustly,” Dr Neumann said.
“But the supply response to the boom over the last 10 years has come at a cost.”
Australia, he said, was “lucky because of your competitive ability to produce cheaply”.
But many projects were now coming on stream around the world, he said, especially in Africa and Latin America.
“A lot of commodity cycles suffer from an over-investment in extraction during the good years.
“Now it’s a question of whether the supply side will lead to ¬prices falling at some point.”
Australia, however, could benefit immensely, he said, “if India follows in China’s footsteps” after the election of the new government in the country led by Narendra Modi.
“India is a different animal, with a more laborious policy making process,” he said.
“But it will become the most populous country in the world in a few years, and if it can step economic growth up to 8-9 per cent and keep it there for a decade,” that would in itself keep global commodity prices high.
Dr Neumann said that Australia’s underlying currency strength was being driven by Japan’s financial easing, which is also a key stabilising feature for Indonesia and other countries in Asia.
This started with record mergers and acquisitions activity, and had continued, he said, with new bank lending.
“Japan now has among the best capitalised banks in the world, and they have no loan growth at home,” Dr Neumann said.
Quantitative easing had landed them with massive excess cash reserves, now 12 per cent of total assets, rising to 16 per cent by the end of the year, he said.
That 16 per cent is earning just 0.1 per cent from the Bank of Japan, while Australian 10-year yields are realising 3 per cent, hence the attraction of Australian bonds.
The Japanese government was also encouraging firms to invest abroad, he said, because the unemployment rate was at a 16-year low, there were labour shortages, and domestic capacity could not be expanded.
Geo-strategic rivalry with China provides a further impetus for Japanese eagerness to invest in the region, including in energy and in agriculture.
He said that “corporate Japan is often written off as being behind the curve. But it still has a lot of good companies” — including global leaders in cameras, electronics and cars, for instance.
Dr Neumann said that there were “quite striking parallels” between Japan’s Prime Minister Shinzo Abe and China’s President Xi Jinping, both reformist “princelings” with political-establishment backgrounds, and both facing tough opposition — in Japan chiefly from private cor¬por¬ations, in China from state owned enterprises.
In China, he said, President Xi was grappling with local governments, “to get them to do his bidding”.
In Japan, Mr Abe was struggling with “politicians and bureaucracies in the ministries”.
“A functional element of President Xi’s anti-corruption drive is his need to reduce opposition to reform, to send a message including to SOEs (state-owned enterprises) that he is serious about cracking the whip,” Dr Neumann said. “A lot of local governments in China have done whatever they wanted to do in the last decade, for instance ignoring calls to shut down overcapacity in the steel sector.”
In Hebei province — which surrounds Beijing — furnaces were shut down, he said, but then bigger ones were built next door.
The key to restructuring the economy to drive consumption and services, he said, was to unleash market forces through deregulation, forcing SOEs — not just the 112 central corporations but the 120,000 local SOEs — to compete on a level playing field with the emerging private sector.
Meanwhile, Mr Abe was tackling his private sector challenge through enforcing new corporate governance requirements at the core of his “third arrow” structural reform program, he said, forcing companies to become more active and more accountable.

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BHP bearish on lower-grade ores

Peter Ker
540 words
23 Jul 2014
The Sydney Morning Herald
SMHH
English
© 2014 Copyright John Fairfax Holdings Limited. Factiva.Gateway.Messages.Archive.V1_0.ELink
Price discounts for lower-grade iron ores are here to stay, says BHP Billiton marketing president Mike Henry, despite the protestations of smaller miners such as Fortescue Metals Group and Atlas Iron.

Lower-grade iron ores have sold in recent years for between 93 per cent and 87 per cent of the benchmark iron ore price, but in the June quarter that pricing discount widened significantly.

Both Fortescue and Atlas produce lower-grade ores, and both reported receiving prices that were weaker than expected, with Fortescue revealing a price discount of 20 per cent below the benchmark price during the month of June.

The two miners have sought to reassure investors that the wider discount is a phenomenon that will soon pass, but speaking on Tuesday, Mr Henry was not so sure.

"Without wanting to call the exact differentials, I think the dynamic of wider spreads than we've seen in times when the market was tighter is absolutely here to stay," he said.

"As the steel industry in China moves towards higher productivity and wanting to make use of their more productive, higher volume blast furnaces, they are more than likely to want higher-quality product and be willing to pay a premium for that relative to the lower-quality iron ores."

The comments are at odds with a statement made by Fortescue earlier this month, when it predicted the traditional discount levels would soon resume. "Fortescue expects the iron ore market to rebalance in the short term as higher cost production leaves the market flattening the global cost curve and stabilising the price," the company said on July 11.

Atlas Iron managing director Ken Brinsden also predicted a reversion to traditional price discounts on July 10.

"We are confident that the supply and demand balance for iron ore, and the 'value in use' differential between products of differing grades mean both price and product discounts have likely overshot their natural range," he said.

Mr Henry said BHP's long-term view of the iron ore price had not changed, despite the recent dip below $US100 a tonne.

"We are not reading too much into the sharp dip that occurred or the slight rebound that we are seeing currently. We just see it as part of a long-run trend where you are going to see volatility around the mean but that mean is going to be declining over time," he said.

Iron ore was fetching $US96 a tonne on Monday, after fetching $US98 a tonne last week.

Mr Henry said BHP continued to expect prices for thermal coal and coking coal to improve in the mid to long term, but he reiterated the two commodities would face difficult markets in the near term.

He was speaking after BHP donated a further $6 million to an environmental program called Bush Blitz, which has helped discover more than 700 new species.

BHP will report its June quarter results on Wednesday morning, and most analysts expect it to easily beat its full-year iron ore export target of 217 million tonnes, and roughly meet its full-year copper production target. BHP shares closed 29¢ higher at $38.51.


Fairfax Media Management Pty Limited

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Anglo warns of ore price torpor

THE AUSTRALIAN JULY 26, 2014 12:00AM
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Matt Chambers

Resources Reporter
Melbourne

MINING giant Anglo American says iron ore prices are set to remain depressed for the rest of the year as growing supply exceeds demand that is being tempered by a fragile Chinese housing market.

But the outlook is better for coking coal, with the British miner’s Wollongong-born chief executive Mark Cutifani expecting contract prices to rise from six-year lows of $US120 a tonne and change the fortunes of the company’s metallurgical coal unit, where first-half profits fell 86 per cent.

Anglo released first-half earnings last night, reporting a $US2.9 billion ($3.08bn) profit, in line with expectations. Net debt of $US11.5bn was lower than forecasts of $US12bn because of lower capital expenditure.

Anglo is the first of the big miners to deliver its June-half profit report and the first to offer its assessment of the global markets, with Rio Tinto and BHP Billi­ton both having stopped giving their views on economics and fundamentals in quarterly production reports.

“Uncertainty is likely to persist for the balance of 2014, though there are some encouraging signs that activity is strengthening in our key markets,” Mr Cutifani said. “Over the long term, we expect new supply to be constrained and to see tightening market fundamentals and a recovery in price performance.”

On iron ore, which makes up less of Anglo’s portfolio than that of its Australian-listed rivals, Anglo said prices that had fallen 30 per cent to $US94 a tonne since the start of the year were unlikely to improve in the short term.

“Steel fundamentals remain under pressure. Although recent data points to a recovery in economic growth in China, the construction market continues to be fragile as concern persists over housing prices,” Anglo said.

“Iron ore prices are expected to remain around the current level as supply exceeds demand in the second six months (of the year), though restocking by steel mills and a slowdown in Chinese domestic iron ore production in winter is expected to support ­prices towards the end of the year.”

Illustrating how tough global coking coal markets are, the Anglo’s coal unit delivered underlying operating profit of $US18 million, down from $US130m a year ago, despite coal chief Seamus French slicing 31 per cent in costs from the company’s mainly Queensland coking coalmines and bringing them into the lowest-cost quartile of global mines.

But Mr Cutifani said no more drastic measures would be taken and that the coal unit was doing well operationally.

“There’s still the opportunity to improve costs, but for me it’s more a pricing story — we are among the most competitive (mines) in the world,” he said.

“On prices, we’re hoping to see a bit more joy in the third and the fourth quarter, certainly the noises we’re hearing out of Asia show there might be a little bit of help in the second half.”

Mr Cutifani denied reports this week that the company was in talks to sell Australian and South African manganese assets it jointly owns with BHP.

“We have a good relationship with BHP, the asset is delivering a return on capital employed north of 23 per cent, we like manganese, we like our position and we expect to continue as we are,” he said. He did not comment on BHP’s intentions.

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http://www.theage.com.au/business/iron-o...3cnts.html

Iron ore price dip to hit miners' earnings
Date
July 28, 2014 - 12:37AM

Peter Ker
Resources reporter

Australia's iron ore miners will report higher profits next month, thanks to 12 months of brutal cost cutting and a huge increase in export volumes, which have more than offset lower export prices.

But the trend for higher exports to outpace price declines is set to reverse soon. The new financial year is expected to herald the start of an earnings decline for the nation's iron ore industry that could run for several years.

While the methods that have delivered better profitability in 2014 will be deployed again – Australian miners are expected to raise iron ore exports by 12 per cent in 2014-15 – most are tipping bigger declines in iron ore prices, with consensus suggesting the benchmark price will be between 15 per cent and 20 per cent lower.

The lower profits are likely to be most pronounced at single-sector iron ore miners such as Fortescue, Atlas and BC Iron, whose net profits after tax are tipped to fall by between 30 per cent and 50 per cent in fiscal 2015. That's despite plans to raise export volumes by more than 25 per cent at Fortescue and 17 per cent at Atlas.

BHP Billiton and Rio Tinto produce several commodities, but both rely on iron ore for more than half their earnings and the iron ore divisions of both are also tipped to suffer a slide in earnings over the next three years.

The outlook is rosiest at Rio, where the falls are expected to be slight, and halted by a strong improvement in earnings towards the end of the decade when iron ore shipments are tipped to explode towards 360 million tonnes a year.

The federal government's commodities forecaster, the Bureau of Resources and Energy Economics, in a recent outlook paper on the sector, said the volume of iron ore exports had risen by about 21 per cent in 2013-14 from the year before, while the value of iron ore exports rose by 30 per cent. But in the 2015 financial year, the forecaster expects a 12 per cent rise in export volumes to provide just a 3.1 per cent rise in export value.

The trade-off for investors of a low iron ore price is the fall in capital spending, particularly at BC Iron, Atlas and Fortescue.

Bell Potter analyst Stuart Howe said the expected trend for declining profits should not scare investors away from certain picks in the iron ore sector.

"You might see profits falling away on falling commodity price outlooks, but dividends could hold up or in fact increase," he said.

BC Iron is particularly known for its strong dividends, while all other iron ore miners have also hinted at better dividends in the near future.

"The likes of Fortescue should be able to increase dividends as capital spending falls and they get debt under control, so that's something for retail investors," Mr Howe said.

"BHP and Rio will be shielded to some extent by their more diversified businesses, enabling progressive dividend growth."

The benchmark iron ore price has been below $US100 a tonne since May 16.

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http://www.theage.com.au/business/miners...zxwzt.html

Miners shift iron ore price in push back against China
Date
July 29, 2014 - 4:26PM

Peter Ker
Resources reporter
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Chinese buyers have been unwilling to buy lower grade iron ore unless offered a discount of between 15 per cent and 20 per cent below the benchmark price.
Chinese buyers have been unwilling to buy lower grade iron ore unless offered a discount of between 15 per cent and 20 per cent below the benchmark price. Photo: Bloomberg
Australian iron ore miners are playing with the structure and dating of contracts for the ore in a bid to lessen the impact of big discounts being forced on them by Chinese buyers.

The benchmark iron ore price has been below $US100 a tonne for more than two months, and Chinese buyers have been unwilling to buy lower grade iron ore unless offered a discount of between 15 per cent and 20 per cent below the benchmark price.

Those discounts are much bigger than have traditionally been offered by the likes of Fortescue Metals Group, Atlas Iron and BC Iron, forcing those miners to inject some creativity into the bargaining process.

Instead of continuing to set prices in accordance with the previous month’s average iron ore price, BC Iron managing director Morgan Ball said his company had been offering buyers a choice of several reference periods against which to calculate the iron ore price.

For example, ore delivered in April may actually be priced until May or June. Or instead of accepting a big discount, a miner may offer a buyer the choice of taking a smaller discount on the monthly average price of the price at another point in time.

Known as “quotation periods”, Mr Ball said the variations were being used as a way to bargain with buyers who pushed for a large discount.

“As the prices have started to get a bit softer, to minimise discounts we are being a bit more flexible with quotation periods,” he said.

‘’If we want to keep the discount a bit skinnier, we may give them the flexibility to choose one of two or three quotation periods, whether that is the monthly average or ten days from sailing or arriving in China.

“It’s a bit of a trade off.”

The tactic was evident in BC Iron’s June quarter results where the average received price of $US87 per tonne was adjusted to $US84 per tonne, after taking into account some shipments from the March quarter which were not priced until the June quarter.

Both received prices were well below the $US103 per tonne that the benchmark iron ore price averaged during the three months to June 30.

Atlas Iron has also been shipping iron ore that is not priced until several months later, due to quotation period adjustments.

Atlas last week revealed that the vast majority of its shipments during April were priced in accordance with May and June iron ore price averages.

But given the poor performance of the iron ore price during June in particular, those quotation periods resulted in Atlas receiving less money than if it had been able to sell its April cargoes at the daily market price during April.

But Atlas noted in its quarterly statement that the result could easily have gone the other way.

“In quarters where the price trends upwards the reverse effect will occur,” the miner said.

Quotation periods have been a controversial topic in the iron ore industry over the past decade, ever since BHP Billiton successfully pushed for the abolition of a system which saw iron ore prices set annually via negotiations between steel mills and miners.

The abolition saw a significant amount of iron ore sales shift to a daily market price, however most miners retain a degree of flexibility around how they price their product.

About 25 per cent of Rio Tinto’s iron ore is priced in accordance with the average price during a period beginning four months previously, and ending one month previously.

The other 75 per cent is either sold at the daily market price, the average price over the previous month, or the average price during the quarter in which the sale is made.

The iron ore industry has been hotly debating the longevity of the price discounts that have recently been imposed on lower grade ores.

Atlas and Fortescue have insisted that the bigger than usual discounts being imposed on their products are a temporary phenomenon, but BHP’s marketing boss Mike Henry has disagreed, telling Fairfax Media last week that discounts for lower grade ore were “here to stay”.

When asked for his view, Mr Ball appeared to side with Atlas and Fortescue.

‘‘The sense I get is the discounts you saw in June are probably topping out now,’’ he said.

‘‘My instinct is that June discounts are at the top end of it and you will see them ease down again.’’

BC Iron has vowed to return between 30 per cent 50 per cent of its net profits after tax to shareholders in the form of dividends, and Mr Ball said he did not expect to deviate from that promise.

“We will look at the whole year in totality and I’m comfortable that we will be within our guidance in our dividend announcement, but that board meeting will not be until late August when we have all the financial numbers finalised,’’ he said.

BC Iron’s joint venture with Fortescue produced 5.8 million tonnes during the 2014 financial year, of which 4.3 million tonnes belongs to BC Iron.

BC Iron shares last traded at $3.27.

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Iron ore, coal tipped for gradual recovery
THE AUSTRALIAN AUGUST 04, 2014 12:00AM

Sarah-Jane Tasker

Reporter
Sydney
IRON ore and coking coal prices may have already reached the bottom, a leading commodity analyst says, but any recovery is going to be more gradual than in the past.

ANZ’s global head of commodity strategy, Mark Pervan, has outlined in an extensive report that with the stabilisation of the overall macro environment, commodity markets are entering the second half of 2014 on a positive note. But, Mr Pervan added, it was likely to be a far more gradual recovery than in the past.

“It will be tempered by lower liquidity and a stronger US dollar as the Fed nears policy normalisation,” he said. “Supply-side issues remain, but the bottom appears to have passed for coking coal and iron ore. Seasonal drops in power demand will cap any thermal coal recovery.”

His comments came as Luxembourg-based ArcelorMittal reported a profit of $US52 million ($56m) in the second quarter, compared with a loss of $US780m in the same period a year earlier.

The steel giant’s iron ore mining business suffered, though, recording a decline in profit on the back of lower iron ore prices.

“We were expecting prices to fall, but like any other mining company we are also surprised that this fall has come sooner — and like other mining companies we are more surprised about the fall in the coal price, which is much cheaper than anyone expected,” Arcelor Mittal chief executive Lakshmi Mittal said.

He said he remained “cautiously optimistic” on the outlook.

“We have seen a significant correction in iron ore prices for this year,” he said.

ANZ’s Mr Pervan said iron ore was showing signs of recovery but that it looked “hard-won”.

“Key consumers — Chinese steel mills — still don’t seem convinced higher prices are warranted, while high iron ore port stocks and rising seaborne supply remains on offer,” he said.

He said they could start changing that view, with Chinese iron ore port stocks declining marginally in recent weeks. Mr Pervan said if that trend continued, steel mill restocking activity should pick up. He said slower growth in new production in the second half should deliver slightly better prices near $US100 a tonne in the fourth quarter, when Chinese iron ore imports tended to seasonally strengthen.

On coal, ANZ expects the coking coal price to firm into the $US115 to $US120 a tonne range in the second half of the year.

Thermal coal continues to look “very weak”, according to the ANZ commodity team.

“We don’t expect any meaningful price recovery until well into the fourth quarter, with prices likely to hover around the $US70 a tonne level for the next few months.” Mr Pervan said.

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BC Iron tips iron ore price lift
AAP AUGUST 06, 2014 3:00PM

Pilbara iron ore miner BC Iron predicts the iron ore price will head above $US100 per tonne over the next six months as demand for the company's product remains strong.

Chief executive Morgan Ball said the recent experience of iron ore price falls and slight rebounds had been reasonably similar to 2012.

"Prices came down and discounts on tier-two iron ore creeped up a bit and then they came back again, and I think we're seeing that again," Mr Ball told reporters at the Diggers and Dealers mining conference in Kalgoorlie.

Iron ore is trading around US$95 per tonne after dipping to US$89 earlier in the year.

Mr Ball said around $US90 appeared to be a natural floor, taking into account changes to Chinese domestic production.

"Admittedly it's about $US10 to $US15 lower than what we thought which was about $US100 to $US110," he said.

Mr Ball believes the iron ore price will continue to creep up over the next six months.

"I'd like to think it will be above $US100 per tonne."

He said fluctuations in the Australian dollar would be important for iron ore miners over the next few months.

He said a fall in the Australian dollar and lift in the iron ore price would be a "nice combination".

Mr Ball said there was still potential to expand operations in the Pilbara, but for now the company was focused on maintaining production of six million tonnes per annum at its Nullagine joint venture project over the next six years.

On average BC Iron sends three ship loads to China each month.

The company also touched on growth options in Brazil, with Mr Ball describing the company's joint exploration project as still a "small kernel of an idea".

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Iron ore price slumps to two-month low
DANIEL PALMER BUSINESS SPECTATOR AUGUST 14, 2014 8:35AM

THE iron ore price has slumped to its lowest level in two months as investors fret about the strength of the Chinese economy.

Benchmark iron ore for immediate delivery to the port of Tianjin in China is currently trading at $US93.20 a tonne, down almost 1 per cent from its $US94 closing mark in the previous session.

At the current price point, iron ore is at its lowest level since June 20, when it traded at $US92.10.

Earlier in June, the iron ore price dropped to as low as $US89 a tonne, but despite a minor rebound since then year-to-date falls are still over 30 per cent.

The latest downward move comes amid continued oversupply in the market due to increased supply from heavyweights like BHP Billiton and Rio Tinto and softer demand from China.

Much of the focus in the past 24 hours has been on demand as Chinese economic data failed to flatter yesterday. Of particular concern were signs of a continued slowdown in industrial production and a sharp fall in credit growth.

The recent decline comes after Goldman Sachs last week confirmed its warning for iron ore prices to average $US80 a tonne next year on the back of comments from iron ore giant Vale that hinted the glut of supply was not likely to resolve itself anytime soon.

At the same time local firm BC Iron, which made a $250 million bid for Kerry Stokes’ Iron Ore Holdings this week, suggested prices above $US100 a tonne could be expected in the next six months.

Also backing higher prices recently was Westpac senior economist Justin Smirk, who suggested prices could again rise above $US120 a tonne within the next 12 months.

“We are likely to see softer near-term growth in ore supply overall as Chinese and other sources of ore moderate production,” Mr Smirk wrote in a report last Wednesday.

“Any near-term upside surprise in demand will be a positive for prices.”