Youcan safelybankonfurther losses in iron ore, sayscommodityexpert
IN A BEATEN up commodities world with copper, gold and crude oil on the slide, Citigroup said the best trade at present was to wager on further losses in iron ore.
“We’ve been generally bearish for the last two years, really, so still even today we probably see more opportunities for the downside than to the upside,” said Ivan Szpakowski, the bank’s commodity strategist in Hong Kong. “Our most-preferred trade at this point would be short iron ore.”
Iron ore sank to the lowest fleet of eight ships is set to be delivered from next year tuntil 2018, and will cover 12 percent of its annual shipments, or about 20 million tons.
“We’ll get that up and running and see how that transpires before we go rushing out since at least 2009 this month as the largest producers including Rio Tinto and BHP Billiton boosted output into an oversupplied market, seeking to expand sales and cut costs per ton.
While Australia’s Fortescue Metals said last week that it was capping shipments, Brazil’s Vale reported the second-highest quarterly output ever. Supplies would expand further while demand was weak, Szpakowski said on Friday.
“It’s Vale, it’s Rio Tinto, it’s BHP, as well as the ramp up now at Roy Hill,” Szpakowski and buying any more,” Pearce said last week. “It looks like it’ll be a very successful strategy for us.”
Each ship will carry about 260 000 tons of ore.
As its largest rivals continue to lift output, Fortescue is said, referring to the mine backed by billionaire Gina Rinehart that is scheduled to start shipments this half.
“That’s the big supply increase we’re facing. At the same time, the structural story for demand in terms of Chinese steel is quite weak.”
Ore with 62 percent content delivered to Qingdao fell 0.1 percent to $51.72 (R652) a dry ton on Thursday, according to Metal Bulletin.
Prices dropped to $44.59 on July 8, the lowest in at least six years, and are 27 percent lower this year. While Szpakowski did capping production at 165 million tons a year and focusing further on cutting costs.
Vale, which must ship its cargo three times further than Australian producers to reach China, would win “quite a significant” cost advantage once not give a price target in the interview, the bank has forecast that prices will slump below $40 this half.
The Bloomberg commodity index traded at the lowest level since 2002 on Friday amid concern that supplies are exceeding demand.
Crude oil in New York entered a bear market last week, while copper in London fell the lowest in six years.
Gold was at the lowest since 2010 as investors expected the Federal Reserve to start raising interest rates this year, boosting the dollar. – Bloomberg