The price of iron ore hit a five-month low over the week despite China’s latest trade figures revealing the world’s top consumer purchased a record amount of the commodity in 2013. Over last year the world’s second largest economy imported a record 820 million tonnes of iron ore, growing 10 per cent from 2012. Purchasing slowed down in December with imports dropping 5.7 per cent from the prior month to 73.4 million tonnes.
Australia's Bureau of Resources and Energy Economics (BREE) has forecast Chinese iron ore imports will expand 7.4 per cent in 2014 while Australian exports are expected to jump more than 20 per cent.
Chinese demand will be met from some of Australia’s largest miners such as Rio Tinto Limited (ASX:RIO), BHP Billiton Limited (ASX:BHP) Fortescue Metals Group Limited (ASX:FMG) as projects come on stream.
China trade surplus disappoints
China’s trade numbers have fallen short of expectations. The nation’s General Administration of Custom’s reported a trade surplus of $US25.6 billion for December with exports lifting 4.3 per cent and imports rising 8.3 per cent.
China’s annual trade surplus gained 12.8 per cent to $US259.75 billion over 2013. Total trade climbed 7.6 per cent to $4.16 trillion – coming in just below the government’s 8 per cent target but representing a record high and catapulting China to the world’s largest trader of physical goods.
Over the year China's biggest trading partners were The European Union, followed by America, the Association of Southeast Asian Nations (ASEAN), Hong Kong and Japan.
Port Hedland pumps up shipments
Australia’s biggest port again increased exports at the end of 2013 - undiscouraged by a tropical cyclone which hit the Pilbara coast of Western Australia. The Port Hedland Port Authority reports iron exports to China grew 8 per cent to 24.2 million tonnes while total iron ore shipments reached 29.5 million tonnes in December. The gains came despite being impacted Cyclone Christine which forced a two-day halt in shipments.
Commentary
AMP Limited’s
(ASX:AMP) AMP Capital Investors Head of Investment Strategy and Chief Economist, Dr Shane Oliver spoke to FNN about his outlook for the year ahead including forecasts for commodities.
“The iron ore price will hold up reasonably well as the Chinese economy does OK.” Mr Oliver said. Mr Oliver also saw strength in base metals such as copper on the back of a better outlook for the global economy. However this pick-up in the global economy could have a mixed outlook for the energy sector Mr Oliver believes:
“Energy prices is a mixed one. On the one hand as the global economy picks up that’s good for energy prices - gas, oil and so on. But I’m also conscious out there that the world’s biggest economy is boosting its energy production dramatically with the shale fracking technology in the US and consequently that’s one factor which will hold the oil price back a little bit.”
Working relationships
Coal developer Whitehaven Coal Limited
(ASX:WHC) has inked a 12-year rail haulage deal with Asciano Limited’s
(ASX:AIO) Pacific National Coal division. The new agreement is geared to providing a more efficient train fleet configuration and Asciano says it reflects both company’s confidence in the long term outlook for Australian coal mining.
Western Desert Resources Limited
(ASX:WDR) has awarded Leighton Holdings Limited’s
(ASX:LEI) business Thiess a three-year $135 million mining services contract. Thiess will work on the iron ore explorer’s Roper Bar Project in the Northern Territory from next week.
Stocks start the year with a spike
Red Mountain Mining Limited
(ASX:RMX) has climbed more than 600 per cent this year after impressing the market with results from its Batangas Gold Project in the Philippines. The gold explorer has described the results from the Lobo Prospect as exceptional and again entered into a trading halt on Monday ahead of a capital raising announcement due Wednesday.
Nucoal Resources Limited
(ASX:NCR) has risen more than 80 per cent over the week after telling the market it will fight to keep its coal licences. The New South Wales focussed miner has been at the centre of a state corruption inquiry and says it will lodge its submission to the state government to prove why the Doyles Creek project exploration licence should not be cancelled.
Stocks struck with bad news
Neon Energy Limited
(ASX:NEN) has plunged more than 75 per cent over the past week after releasing the second disappointing drill test result in a fortnight. The oil and gas explorer has advised the operator is preparing to abandon both wells.
Perth-based junior miner Continental Coal Limited
(ASX:CCC) has warned the market it may be forced to appoint a voluntary administrator if it cannot successfully recapitalise the company and has this week extended its voluntary suspension.
- Lelde Smits
