Iron ore to drop below $80 in 2025

Bank of America says iron ore will drop below $80 next year.

https://www.mining.com/bank-of-america-sees-copper-price-surging-above-10000-iron-ore-slipping-below-80-by-2025/

Chinese Steel Mills Unprofitable

It's not looking good for steel, iron, nickel and zinc.

Break-even cost curves

Thread about cost curves. 

Silver:

Zinc:

Copper:

Uranium:

Tin:

Oil:

Gold:

Iron ore:

Platinum:

Palladium:

PGM:

Potash:

Lithium:

Spodumene:

Thermal coal:

Met coal: (2024)

Natural gas:

Iron Ore Inventories Are Rising

Iron ore has huge problems.

 

Outlook Commodity Prices - BMO Capital

Iron ore is about to crash according to BMO Capital. I would take profits in Vale.

 

Copper Vs Aluminum Import Volumes

China copper demand has been very strong for a long time, but has actually not increased from last year. However, aluminum (and therefore also iron and steel) has been very strong recently and more importantly, continues to be strong.

The Holy Trinity

China GDP rose 18% in Q1 2021.

U.S. GDP estimates were higher.

It is a very good time to invest in commodities as they are all breaking out. To do this, buy the holy trinity: VALE, SBSW, CSFFF.

 

Iron Ore Vs. Floor Space Under Construction China

Iron ore is correlated to China construction.

 

Floor space under construction by property developers in China. 

All the construction data for China can be found here.

https://www.ceicdata.com/en/china/commodity-building-floor-space-under-construction-monthly

China steel production data needs to be monitored.

Iron Ore

China's iron ore production is not growing.

This is because costs of production are very high in China.

China is the largest iron ore consumer and iron ore imports are growing.

China iron ore imports hit a record in 2020.

Iron ore demand is going to grow.

Iron ore is currently in deficit.

Brazil and Australia have the largest iron ore reserves.

Therefore Vale is a good investment.

Copper Vs. Iron Ore

Copper is a leading indicator for iron ore.

Chinese Iron Ore Imports Make New High

If you are concerned about the Chinese economy, you shouldn't. Chinese exports for the month of September came in at $186 billion, a 9.9% increase year over year.

We did have a little dip end 2008 where exports fell to about $65 billion, but since 2009, the Chinese kept growing their exports as you can see on Chart 1.

Chart 1: Chinese Exports

As Zerohedge's chart points out, exports and imports are mostly equal. If exports move up, imports will move up too. Mostly exports are higher than imports as China has a trade surplus.

The thing to consider is that if exports go up, imports will go up and as a result, commodities will go up in price (Chart 2). We had 3 months of consecutive drops in imports, but September has made an end to that. In September, China imported a record amount of iron ore, the highest since January 2011: 65 million tonnes. Also copper imports jumped to a 4 month high.

Chart 2: Chinese Exports - Imports

On Chart 3 you can see that 65 million tonnes of iron ore imports isn't that much compared to the previous months, but it's a start. China has started a 1 trillion yuan stimulus and we will certainly see the effects of this in the coming months.

Chart 3: China Iron Ore Imports

To see how to profit from this, read more here.