Iron Ore ended the June quarter the same way it ended the March quarter – down.
At $93.68, September 62% Fe Swaps are down $17.23 a tonne over the quarter for a loss of 15.54%.
But that hasn’t stopped analysts at Citigroup and Fortescue Metals chief financial officer Stephen Pearce remaining bullish on Iron Ore’s prospects.
Bloomberg reported yesterday that Citigroup analysts believe the closure of high cost Chinese iron ore mines will increase demand for supplies from countries like Australia.
It’s a view that FMG CFO Stephen Pearce has great sympathy with. He told The Australian that as a result of the big supply increases from Australia, the market needed to adjust and that “I think it will take another month or two for the market to digest that and for the market to respond.”
He does, however, believe that the market is starting to stabilise and that:
I think we’re perhaps already seeing early signs of that in the marketplace as we’ve just gradually crept off that $US90 level and potentially seeing some early drawdowns of stock at the ports, maybe subtly indicating we’re just stepping off that bottom.
Pearce made a very instructive comment for traders and investors in that he thought the short-term economic focus on Chinese data was “a little bit dangerous” and he prefers to look at longer term trends over 6 and 12 months.
He doesn’t expect prices to rebound back to $140 a tonne but added: “I think it will re-emerge and settle around that $US110 mark.”
That would be great news for Australian iron miners, like Fortescue, stock price and great for the national accounts.