Iron ore prices descended, with benchmark CME Iron ore 62% Fe futures (TIOc1) slipped from the level of $86.76 (Closing on 6th March) to the level of $85.15 (Closing on 11th March) first and dropped further to the present level of $84.53 amid building steel inventory in China. The china steel output rose despite the ban on a few Chinese steel production mills, which further accumulated the Chinese steel inventory in the absence of strong domestic demand.
The iron ore demand is also facing a halt due to the china increased stance over curbing the pollution level and stay in line with Euro 6 emission standards.
In the falling scenario of iron ore prices, the concern over the supply disruption due to the ban on Brazilian giant miner Vale is supporting the iron ore prices and preventing any steep fall in it. The improvising trade talks among the two major economies -US and China is further boosting the market sentiments and supporting the iron ore prices.
How Leading Iron ore Miner, BHP reacting to the falling iron ore prices?
BHP Group Limited (ASX: BHP) marked a drop in its share prices from the level of A$37.430 (day’s high on 7th March) to the level of A$36.450 (day’s low on 11th March). However, the prices soon took a correction from A$36.450 to mark a level of A$37.240 (day’s high on 12th March). The share ended the trading session on a negative note amid fall in iron ore prices.
The fall in the share prices could see a rebound if the company position itself to jump and fill in the supply disruption before the supply chain repair itself.
The company hosts Western Australia Iron Ore (WAIO) system of four processing hubs at Newman, Yandi, Mining Area C and Jimblebar and five mines.
The company also hosts four main WAIO joint ventures (JVs) namely, Mt Newman, Yandi, Mt Goldsworthy and Jimblebar, and holds 85% stake in all the joint ventures and the test is hold by Mitsui and ITOCHU.
As per the company, the WAIO achieved record production in FY18, supplemented with record production from Jimblebar and Mining Area C.
However, the company posted a decline in profit for H1FY19, despite such major iron ore operations. To gauge the direction of its share prices, investors or stakeholders, should keep an eye on the exploration development along with the operational costs.
The Iron ore prices do not affect the share prices of the group alone as the group is engaged in the exploration and production of other metals as well. However, the overall commodity scenario along with metal demand in the global market does impact the prices.
This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.