iron ore price

Flow-on effects 'worrying': union

Steven Price from the Australian Workers Union says members are in a state of disbelief about the possible cuts.

"It comes as a complete surprise to our members and naturally from that there's angst about their job security and that then creates safety concerns on the job, because people aren't thinking about what they should be," he said.

"They've got other things on their mind about paying their mortgage, how long they've got a job, if they've got a job."

Mr Price says the economic flow-on effect from large scale job losses in the iron ore sector could be huge.

"The worrying part about it is of course that iron ore has always been pretty much the foundation of what everyone else makes their decisions on," he said.

"And with an iron ore company making such a significant reduction in manning numbers, I think that will put a lot of concern through a lot of other industries through the state."

Planned cuts unsurprising in current climate

Resource analyst Giuliano Sala Tenna, from Bell Potter Securities, said BHP needs to cut costs.

"It doesn't surprise me that BHP along with other iron ore miners are indeed looking at how they can extract further cost savings from their operations," he said.

"In the good times when iron ore pricing was north of $140 a tonne there's no doubt that all the iron ore miners probably got a little bit fat in a sense of their staff and operations.

"The magnitude of the cuts is probably a little bit surprising, but also we need to remember it is a recommendation at the moment and they will need to work through this in more detail."

Mr Sala Tenna said he expects other iron ore companies may follow BHP's lead.

"We see it time and time again throughout the cycle that in the good times the miners are very aggressively hiring staff and in the bad times they need to let go of staff," he said.

"We've seen BHP already let go 100 jobs in the Perth head office and there's another 170 cuts made at their Mt Whaleback mine as well.

"So, look this is a process that is probably going to be ongoing and we'll probably expect to see the same at Rio and Fortescue in due course as well."

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kuantan iron ore mining

China's May iron ore imports fall 7 pct from April
    * Iron ore supply still outpacing demand - trader

    By Manolo Serapio Jr
    SINGAPORE, June 9 (Reuters) - Iron ore futures in China
steadied on Monday as the market stabilised after recent steep
falls in prices spurred buying interest in the world's top
consumer of the steelmaking commodity.
    Spot iron ore prices rose last week after a seven-week slide
that pulled down the raw material to its weakest since September
2012. A glut in supply could limit any further price recovery at
a modest level, traders said.
    Iron ore contract for delivery in September on the Dalian
Commodity Exchange was unchanged at 688 yuan ($110) a
tonne by midday. The contract rose about 0.5 percent last week
after falling in the prior five weeks.      
    "Supply is still more than demand, but we have probably seen
the peak in supply for now and that's helping stabilise the
market a bit," said a Shanghai-based iron ore trader.
    Despite a 13 percent drop in iron ore prices in May, China's
imports of the raw material fell to 77.4 million tonnes in May
from 83.4 million tonnes in April which was the second highest
monthly volume. 
    Imports may continue to decline on a month on month basis
due to high inventory of iron ore at Chinese ports and among
mills, a crackdown on iron ore financing in China and as mills
run down stockpiles ahead of the slow summer season, said Helen
Lau, a senior mining analyst at UOB-Kay Hian Securities in Hong
Kong.
    "This will put more downward pressure on the over supplied
seaborne market. We stay bearish on iron ore and steel prices,"
Lau said in a note on Monday.
    Stocks of imported iron ore at 44 Chinese ports stood at
113.2 million tonnes as of June 6 SH-TOT-IRONINV, down
slightly from a record high of 113.6 million tonnes in the
previous week, according to industry consultancy Steelhome. 
    Chinese steel mills are cutting back on long-term iron ore
contracts in favour of cheaper spot cargoes on expectations that
spot prices are unlikely to rebound strongly anytime soon.
 
    Benchmark ore with 62 percent iron content for immediate
delivery to China .IO62-CNI=SI rose 0.2 percent to $94.50 a
tonne on Friday, according to data compiler Steel Index.
    Iron ore ended the week nearly 3 percent higher in its first
weekly gain in eight weeks, but has stayed below $100 a tonne
since May 19. It touched a 20-month low of $91.80 on May 30.
    

iron ore

While the last decline below $100 in 2012 spurred buyers to rebuild inventories, boosting prices to about $159 in four months, this time around expectations of ample supply will encourage users to keep reserves at a minimum, said Goldman.

“We believe the current downturn could trigger another destocking cycle of similar scale,” Lelong, Daniel Quigley and Amber Cai wrote. “But the eventual rebound will be far less robust than previously.”

Reduced Chinese imports will also offset any impact of expected supply disruptions in India and a possible strike at Australia’s Port Hedland, the world’s largest bulk-export terminal, the bank said. Maritime Union of Australia, which represents tugboat deckhands at the port, approved unlimited work stoppages of 24 hours, 48 hours and 7 days on May 12.

BHP, the third-largest exporter, won’t be able to make up shipments lost during a strike, the company’s iron ore president Jimmy Wilson said in a statement today. The union said May 12 it hadn’t decided whether to take action.