The sun is shining again on Australian iron ore, at least for now, with prices again threatening to touch historic levels just one month after reaching record highs.

Benchmark 62% fines opened the week in China at US$222.30 a tonne, just US$11/t shy of record levels seen in mid-May before the spectre of Chinese government intervention knocked them down.

Researchers from ANZ said Dalian Futures had also risen to their highest level in a month.

“Iron ore extended gains, with the Dalian futures hitting their highest level in a month amid prospects of strong demand and dwindling inventories,” they wrote in a note yesterday.

“The market has rebounded strongly over the past few weeks, with investors shrugging off concerns of increasing government regulations. Instead strong economic data has buoyed sentiment.

“China’s credit expansion was steady in May following a sharp slowdown in April.

“The market is keeping an eye on further restrictions on steel production. Mills in Tangshan have been ordered to reduce output to combat ozone pollution.”

Set amid a strong outlook for steel demand – BMO Capital Markets says global demand growth has pushed the market beyond 2 billion tonnes for the first time – iron ore miners are expected to report enormous earnings results at the end of the June quarter.

 

ASX iron ore stocks

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CODE COMPANY PRICE 1 WEEK RETURN % 1 MONTH RETURN % 6 MONTH RETURN % 1 YEAR RETURN % MARKET CAP
DRE Drednought Resources 0.028 27 17 33 367 $ 64,175,585.79
VMS Venture Minerals 0.1525 13 27 193 703 $ 198,626,892.45
HAV Havilah Resources 0.28 10 10 56 198 $ 82,694,851.56
MGX Mount Gibson Iron 0.91 10 -4 2 30 $ 1,025,818,358.97
EFE Eastern Iron 0.013 8 8 -7 179 $ 8,942,781.17
RHI Red Hill Iron 1.24 8 38 428 786 $ 74,248,904.76
GRR Grange Resources. 0.555 6 3 82 109 $ 630,749,590.41
RLC Reedy Lagoon Corp. 0.019 6 -5 58 280 $ 8,930,497.15
MIN Mineral Resources. 50.91 6 14 47 149 $ 9,329,219,590.26
JNO Juno 0.2 5 18 $ 26,453,310.20
CAP Carpentaria Resource 0.135 4 17 137 575 $ 68,982,393.53
FMG Fortescue Metals Grp 23.51 4 3 6 59 $ 71,493,565,395.96
CIA Champion Iron Ltd 6.79 3 -3 33 143 $ 3,382,191,975.52
MGT Magnetite Mines 0.071 3 4 407 3769 $ 203,701,287.84
SRK Strike Resources 0.225 2 -15 45 350 $ 59,400,000.00
FEX Fenix Resources Ltd 0.325 2 -4 35 278 $ 152,819,524.00
RIO Rio Tinto Limited 126.43 1 1 11 29 $ 46,379,753,777.16
BHP BHP Group Limited 49.08 0 -1 15 36 $ 144,199,425,736.30
ACS Accent Resources NL 0.05 0 32 163 900 $ 23,301,364.15
GWR GWR Group Ltd 0.285 0 -7 -10 375 $ 86,294,136.26
MGU Magnum Mining & Exp 0.19 0 6 197 443 $ 86,058,986.94
GEN Genmin 0.235 0 -16 $ 64,245,387.79
TI1 Tombador Iron 0.1 0 0 59 375 $ 105,673,581.83
LCY Legacy Iron Ore 0.015 0 -12 -6 650 $ 96,071,077.76
ADY Admiralty Resources. 0.017 0 -6 31 143 $ 19,705,289.88
MIO Macarthur Minerals 0.48 -1 5 -10 153 $ 66,088,643.45
MDX Mindax Limited 0.08 -1 116 2567 2567 $ 151,707,716.78
IRD Iron Road Ltd 0.275 -4 41 57 386 $ 221,838,198.40
SRN Surefire Rescs NL 0.019 -5 -21 -58 443 $ 20,780,497.79
TLM Talisman Mining 0.2 -7 -17 106 82 $ 39,191,960.85
FMS Flinders Mines Ltd 0.95 -8 -15 -20 58 $ 153,652,205.07
HAW Hawthorn Resources 0.051 -9 11 -44 -52 $ 17,342,811.88
AKO Akora Resources 0.265 -12 -9 $ 14,087,040.00
BCK Brockman Mining Ltd 0.039 -13 -22 8 77 $ 389,727,749.50
SHH Shree Minerals Ltd 0.013 -13 -13 -43 160 $ 14,885,316.49
CZR CZR Resources Ltd 0.0115 -15 -18 -28 -18 $ 34,236,226.73
MAG Magmatic Resrce Ltd 0.14 -39 -26 -20 -37 $ 29,610,344.75

 

Despite tensions Australia proves its reliability

Supply disruptions at mines overseas have demonstrated why Australia remains a reliable trading partner for China’s steelmakers.

Brazil’s Timbopeba mine has been hit by a suspension after regulators queried the safety of its Xingu Dam.

While Vale has bold ambitions to progressively increase the production rate for its high grade product to 400Mtpa it has proven difficult to achieve in the aftermath of 2019’s Brumadinho disaster.

China’s Shanxi province has meanwhile shut all non-coal underground mines after the flooding of an iron ore mine in Daixian.

Speaking on the Freight Investor Services Castaway Podcast last week, Fastmarkets index manager Peter Hannah explained the reliability of the Pilbara producers was the main reason Australia remains the leading supplier to the Chinese market.

“It’s quite widely known that China can’t really meet any of its development goals without Australian iron ore, it’s just too big of a supply partner,” he said.

“What’s happening in other industries I can’t see happening in iron ore for the time being.

“There is a concerted effort to diversify iron ore in China long-term, they’re investing in their domestic supply which is difficult because it’s limited, low in-situ grades, possibly monetarily costly to upgrade.

“But they’re also looking to invest in Africa – we’re all aware of the Simandou project, starting to break ground on that.

“I think it’s worth thinking about what a reliable trading partner Australia has been on iron ore and the fact that’s only achievable (because) the nature of the Pilbara industry lends itself to vast quantities of iron ore coming out in a very reliable way.”

Concerns that iron ore could be replaced by scrap steel in lower emission electric arc furnaces were misplaced, according to Hannah, saying it would take decades for that market to mature.

“It’s only the volume that it needs at the moment and demand is always increasing, so that target of what EAFs would need to catch up to and produce seems to be constantly getting further away,” he said.

“The fact is with EAF and scrap-based steel is that the scrap supply pool is quite predictable and the growth of it is quite predictable.

“You can’t really accelerate that process. I don’t think there’s too much to worry about in terms of demand for the foreseeable few decades to come for iron ore products.”

He said Chinese steelmakers were more likely to look for higher grade sources of ore to cut emissions in traditional blast furnaces than through scrap steel.

 

Juno Minerals the latest minnow to prepare for production

A number of junior iron ore miners with projects that would be marginal in a normal market have pressed the accelerator as they look to take advantage of high prices while they last.

New float Juno Minerals (ASX: JNO) is the latest to do so.

Spun out of South African manganese miner Jupiter Mines (ASX:JMS) in May, Juno yesterday announced it had released major tenders for its Mount Mason DSO project near Menzies in the WA Goldfields.

It is targeting construction at a rapid pace, with aims to capitalise on the current buoyancy in the market by commencing operations in the first quarter of 2022.

Mount Mason contains a resource of 5.9Mt at an iron grade of 60.1%, a couple per cent shy of the benchmark 62% fines index.

Juno plans to begin operations via the modest Mount Mason resource while it works on plans to develop its larger 1.85Bt Mt Ida magnetite deposit.

The company’s top priority is transport and logistics, with the project located in the Yilgarn iron ore district dominated by Chris Ellison’s Mineral Resources (ASX: MIN).

 

Juno Minerals share price today:


 

 

Strong week for ASX-listed coal sector

 

ASX coal stocks

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CODE COMPANY PRICE 1 WEEK RETURN % 1 MONTH RETURN % 6 MONTH RETURN % 1 YEAR RETURN % MARKET CAP
AHQ Allegiance Coal Ltd 0.74 23 28 196 111 $ 211,920,552.12
PDZ Prairie Mining Ltd 0.27 23 6 42 108 $ 63,939,424.92
WHC Whitehaven Coal 2.15 21 57 33 30 $ 2,168,552,887.20
TIG Tigers Realm Coal 0.009 13 13 -13 5 $ 117,600,321.31
ATU Atrum Coal Ltd 0.045 10 -21 -84 -80 $ 26,186,924.39
NCZ New Century Resource 0.225 10 13 -2 29 $ 272,233,810.35
CRN Coronado Global Res 0.855 10 37 -22 -14 $ 1,424,985,670.50
TER Terracom Ltd 0.125 9 -4 -29 -31 $ 94,200,953.75
NHC New Hope Corporation 1.845 8 47 26 38 $ 1,548,184,172.52
BCB Bowen Coal Limited 0.064 5 5 33 36 $ 63,885,509.29
YAL Yancoal Aust Ltd 2.14 3 6 -14 -2 $ 2,838,944,789.55
CKA Cokal Ltd 0.061 2 -6 -18 42 $ 52,701,191.84
AKM Aspire Mining Ltd 0.084 1 6 17 1 $ 42,641,506.74
MCM Mc Mining Ltd 0.105 0 0 -48 -28 $ 16,214,053.28
MR1 Montem Resources 0.1 0 -9 -57 $ 19,644,191.10
SMR Stanmore Resources 0.74 0 9 6 -14 $ 196,044,597.23
PAK Pacific American Hld 0.021 0 5 0 110 $ 6,690,282.90
LNY Laneway Res Ltd 0.005 0 11 -29 11 $ 18,875,329.67
NAE New Age Exploration 0.014 0 -22 17 180 $ 18,220,057.83
JAL Jameson Resources 0.087 -3 -8 -28 -40 $ 27,299,870.10
BRL Bathurst Res Ltd. 0.3 -9 -3 -23 -43 $ 52,995,003.13

 

Confounding global pressure for banks and mega-corporations to reduce investment out of the fossil fuel industry, thermal coal prices touched nine-year highs last week.

China has been paying more for coking and thermal coal after placing an unofficial ban on Australian exports, with Fastmarkets reporting tightness of supply in the Russian and Chinese domestic markets.

That has elevated coal prices internally within China to prices so high Commonwealth Bank says the Chinese Government is considering price caps, though they would be above the upper end of current spot prices.

Australian prices have lagged but trended upwards in recent months.

Fastmarkets reported on Friday premium hard coking coal prices of $US169.22/t (up 54c/t) fob Dalrymple Bay Coal Terminal, and hard coking coal prices of $151.93 per tonne, (up $6.50 per tonne).

In a note last month analysts at Goldman Sachs wrote they expected Australian hard coking coal to trade at $US160/t in the second half of 2021.

The Chinese export ban and lower prices for coal during the pandemic has put a dent into Queensland’s budget, released yesterday, with royalties sliding from $3.5b in 2019-20 to $1.75b this financial year.

While higher prices are expected to pull it back over $2b next year, the ongoing impact of the Chinese ban means there remains plenty of downside risk for the State’s coffers.

Not all ASX-listed stocks are suffering though, and all bar two on the Bulk Buys watchlist were winners over the past week.

Allegiance Coal (ASX: AHQ) was up 23 per cent as it beds down operations at its freshly opened New Elk coking coal mine in Colorado in the States, which is still exporting coal to China despite diplomatic tensions.

New Elk has a small domestic supply deal and is due to begin shipping coal to Asia in the second half of the year, ramping up to an annualised rate of 1.6Mt per year for a 24-year mine life.

The company announced the start of production on May 24.

Allegiance has backing to open a second production unit at New Elk after selling a strategic stake in the company to Global Energy and Resources, the Singapore based company which backs Queensland coal miner Stanmore Resources and owns a share of EMR Capital’s Ravenswood gold mine, also in the Sunshine State.

 

Allegiance Coal share price today:


 

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