Iron Ore Prices Beat Estimates, shoot to 9-Year High

December 17, 2020 02:32 PM AEDT | By Hina Chowdhary

Iron Ore Prices Beat Estimates, shoot to 9-Year High

Prices Shoot to Nine-Year High

The iron ore price surpassed the US$150 per tonne mark during the first week of December. The future prices of iron ore in China crossed RMB 993 per Mt and closed near the all-time high of RMB 994 per Mt.

Image Source: © Kalkine Group 2020

Australian iron ore exports have already surpassed the A$100 billion mark this year. The surge in prices will help the country to offset the losses from the import ban on thermal coal, wine, barley, and some other commodities by China.

Fear of Supply Shortage Boosting the Prices

Brazil’s Vale, the world’s largest iron ore producer, recently reported that the company is expecting iron ore production in the range of 300-305 Mt for the year 2020. The estimate falls little shy of the production guidance of 310 Mt provided earlier by the company.

The news of slashed production estimate triggered the panic button and catapulted the iron ore prices.

The bullish run has been further aided by the conservative estimate of 315-335 Mt production by the iron ore behemoth in 2021. This is lower than the market expectations and is contributing to the price increase.

Image Source: Shutterstock

Interesting Read: Vale Output Shock, Chinese Demand- Thrust Iron Ore Prices to New highs

China and Australia in Iron Ore Dynamics

China is the world’s largest iron ore consumer and importer, while Australia is the largest iron ore supplier and exporter, globally. Recently, trade relations between the two have been embittered by the Chinese ban on Aussie thermal coal and a raft of other commodities. The market is anticipating similar action on iron ore imports, which can cost Australia in revenue losses.

In the meantime, supply disruption may occur in Brazil due to heavy rains. Analysts also believe that the lower interest rates and weak US dollar are fuelling the iron ore prices.

The low-cost production capability of Australian miners coupled with their excellent export facilities, is expected to benefit the Aussie iron ore miners in this bullish market.

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.