Is this the Floor for Iron Ore?

You’ve got to get used to volatility if you put your money in commodities, especially iron ore. Year-to-date, the price of iron ore has traded between US$94 and US$57 a tonne. Yet, since its high in February, it looks as if iron ore has been on a one-way path down, shown below.

iron ore june 17

Source: Bloomberg

Are we approaching a floor in the price of iron ore?

A fire broke out at Mt Whaleback. It’s a flagship iron ore mine for BHP Billiton Ltd [ASX:BHP] in Western Australia. Some 30 firefighters brought the blaze under control.

As reported by The Australian:

The blaze broke out yesterday afternoon in the processing facilities at the mine, which is the largest of the five iron ore hubs owned by BHP in the Pilbara.

A spokeswoman for BHP confirmed the blaze.

“All personnel at site have been accounted for and we are working to ensure the site is safe,” she said.

“Further details of the incident are still being established but an investigation into the incident will be run.”

The prolonged outage at Mt Whaleback could temporarily limit iron ore supply. The mine is one of the largest open-pit mines in the world. It’s the centrepiece of BHP’s Newman mining hub. The Newman operation produced more than 52 million tonnes of iron ore in the nine months to 31 March. That’s just over 30% of BHP’s iron ore output this financial year.

But don’t expect iron ore to surge to new highs in 2017 just yet. China’s steel market is still well supplied. So, in the short term, the impact could be very minor.


Härje Ronngard,

Junior Analyst, Money Morning

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