Money Here are the breakeven rates for major iron ore miners

19:55  09 january  2018
19:55  09 january  2018 Source:   Business Insider Australia

Iron ore got whacked again to start the week

  Iron ore got whacked again to start the week Iron ore spot markets fell heavily for a second consecutive session on Monday, weighed down by another steep increase in Chinese inventories. According to Metal Bulletin, the price for benchmark 62% fines fell 1.9% to $76.59 a tonne, adding to the 1.3% drop seen on Friday. It was the largest one-day percentage decline since December 27 last year.© Provided by Business Insider Inc As was the case on Friday, the weakness in the benchmark was replicated across the grades.Ore with 65% Fe content slid 1.6% to $92 a tonne while the price of 58% fines fell by a smaller 1.5% to $41.82 a tonne.

It shows the current breakeven levels for various iron ore miners , along with the annual volumes each produce and the average quality of the ore they mine. Macquarie says it used the average for spot freight and exchange rates over the December quarter last year in order to calculate individual firms

It shows the current breakeven levels for various iron ore miners , along with the annual volumes each produce and the average quality of Macquarie says it used the average for spot freight and exchange rates over the December quarter last year in order to calculate individual firms breakeven level.

a truck is parked in the dirt© Provided by Business Insider Inc For those looking to buy or sell shares in a listed iron ore miner, this table from Macquarie Bank may be of some interest.

It shows the current breakeven levels for various iron ore miners, along with the annual volumes each produce and the average quality of the ore they mine.

a screenshot of a cell phone© Provided by Business Insider Inc Macquarie says it used the average for spot freight and exchange rates over the December quarter last year in order to calculate individual firms breakeven level.

At $US28 and $US31 respectively, Rio Tinto and BHP Billiton had the lowest breakeven point of all miners monitored, well ahead of the likes of other market heavyweights such as Brazil's Vale and Fortescue Metals Group at $US43 and $US48 respectively.

Investors think there'll be plenty of rate hikes this year, including one in Australia

  Investors think there'll be plenty of rate hikes this year, including one in Australia If financial markets are on the money, it looks like there'll be even more rate hikes from major central banks this year, including in Australia. That point is rammed home by the chart below from the National Australia Bank (NAB). It shows market pricing for a 25 basis point interest rate increase from the US Federal Reserve, the Bank of Canada and the Bank of England, all major central banks that increased policy rates last year.

For those looking to buy or sell shares in a listed iron ore miner , this table from Macquarie Bank may be of some interest. It shows the current breakeven levels for various iron ore miners , along with the annual volumes each produce and the average quality of the ore they mine. Macquarie says it used.

Using the table, only BHP, Rio Tinto, Arrium and Gina Rinehart’s Roy Hill would be covering their breakeven costs. Source: UBS. In his morning note today, IG Markets analyst Evan Lucas said he was worried about the future of a number of mid-tier, pure-play iron ore miners .

According to Metal Bulletin, the spot price for benchmark 62% iron ore fines stood at $US76.80 a tonne last Friday. In comparison, the price for lower grade 58% fines is currently significantly lower at $US42.32 a tonne.

"The vast majority of the iron ore industry is unsurprisingly in-the-money at current spot prices," Macquarie says.

"Widening Fe-discounts have shifted low-grade producers up the curve, compared to early 2016, while some high-grade marginal producers --including Chile, Peru, Canada, Iran -- have improved their competitiveness, despite their relatively higher operating cash costs."

Macquarie expects the discount between lower and higher grade ores will weaken in 2018, although it says it is unlikely to return to historical lows in the short-term given structurally higher capacity utilization.

"Our analysis implies that if discounts remain large -- or even widen further -- there is a chance that the benchmark price outperforms all price forecasts again in 2018," it says.

Iron ore is ripping higher as China clamps down on steel production .
Iron ore spot markets made it five gains on the trot on Monday, leaving the benchmark price at a fresh multi-month high. Iron ore spot markets made it five gains on the trot on Monday, leaving the benchmark price at a fresh multi-month high.

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