Amid speculation surrounding the strength of the mining boom the Reserve Bank of Australia delivers a cautious outlook, CommSec chief economist Craig James says the ongoing demand from China will be substantial and Westpac’s chief economist Bill Evans predicts commodity prices will rebound. Quarterly production reports are also in the spotlight, with the major miners, BHP Billiton Limited
(ASX:BHP) and Rio Tinto Limited
(ASX:RIO) posting a lift in iron ore output from Western Australia’s Pilbara region.
Resources News Iron ore exports hit 20-month high
China’s trade surplus widened last month as iron ore imports climbed to a 20 month high. China’s customs bureau has reported Chinese exports increased 9.9 per cent and imports increased 2.4 per cent, producing a trade surplus of $US27.67 billion in September. Chinese iron ore imports rose 4.1 per cent to 65.01 million tonnes in September, the most since January last year.
Westpac sees commodity prices rebounding
Westpac chief economist Bill Evans says Chinese recovery will see commodity prices lift by up to 30 per cent next year. Mr Evans told a CPA Congress in Melbourne, “...commodity prices will be up next year. I know resource companies shake their heads and say there must be something wrong with you to think that we might see a 30 per cent jump in commodity prices next year. I expect it will be the case – if I’m right on China.”
Mr Evans also predicted the peak of the mining investment boom would come in the second half of the current financial year, and end sooner than many anticipated, “Now we are getting a fiscal tightening and we are looking over the cliff at the end of the mining boom.”
RBA cautious on mining outlook
The Reserve Bank of Australia (RBA) cautioned that the outlook for mining investment in Australia might not be as strong as previously expected in the minutes of its October policy meeting. The RBA believes recent indicators showed the pace of global growth has declined, citing a noticeable retreat in spending within Australia’s resources sector. According to the minutes, "Notwithstanding the expectation of some recovery in prices of bulk commodities over the coming quarters, it seemed likely that mining investment would peak a little earlier and at a somewhat lower level than had previously been forecast."
Quarterly production reports BHP maintains FY guidance
BHP Billiton Limited
(ASX:BHP) has maintained its full year production guidance after posting a one per cent increase in its first quarter Western Australian iron ore output. Despite the increase from the year before, production fell three per cent from the previous quarter, affected by planned shutdowns due to harbour expansion works. BHP expects its full year iron ore production to be five per cent higher than fiscal 2012.
Rio Q3 iron ore output grows
Rio Tinto Limited
(ASX:RIO) boosted its iron ore production from the Pilbara region of Western Australia by 5 per cent in the September quarter. Rio produced a record 62.9 million tonnes of iron ore in the region, while global iron ore production lifted by five percent to 67 million tonnes in the quarter.
Fortescue on track for FY target
Fortescue Metals Group Limited
(ASX:FMG) is maintaining its full year production target after it also achieved a rise in production for the September quarter. The iron ore miner posted total production of 18.3 million tonnes in the first quarter, a 16 per cent production increase from the previous corresponding period. Fortescue says in its quarterly report that it expects the iron ore price to stabilise at around $US120 a tonne in the short term.
Paladin Q1 production dips
Paladin Energy Limited
(ASX:PDN) has posted a fall in first quarter production, in line with its expectations as one of its mines undertook a planned maintenance shutdown in August. The uranium miner says total output from its Langer Heinrich and Kayelekera mines in Africa dropped 5.8 per cent in the September quarter. CEO John Borshoff says the global uranium market continues to be negatively impacted by the restart schedule for Japanese reactors, post the Fukishima earthquake early 2011.
Iluka Q3 output, revenue down
Mineral sands producer Iluka Resources Limited
(ASX:ILU) has posted a 22 per cent drop in third quarter production and a 58 per cent fall in the third quarter revenue. Having noted a market deterioration in major regional economies and a more pessimistic outlook at the beginning of the quarter Iluka says market conditions remained subdued throughout the three months to the end of September.
Interview FNN asked CommSec chief economist Craig James if he believes speculation surrounding the end of the Australian mining boom was accurate:
“We’re getting towards the peak of the investment phase. So, the price phase of the boom, well that’s peaked, and that’s to be expected,” said Mr James.
Mr James believes Australian producers are now catching up to the strong demand in China and has forecast,“The ongoing demand from China is going to be huge, and we have to invest in new projects to be able to meet that demand, and that’s what we’re doing now.”
To watch more of the interview click
here
