Commodity Blog

Posts Tagged ‘Australia’

The price of iron ore in China, the biggest buyer in the world, reached the highest level in more than a year as Chinese mills began “panic buying”. Spot price was pushed up by panic buying by steel mills on concern about availability of reduced spot cargoes from Australia at a time due to contractual commitments. Government’s stimulus spending boosted steel demand making Chinese mills to increase iron ore purchases.

Annual talks of iron-ore suppliers with steelmakers were carried out to fix benchmark contract prices for the 12 months from the start of the Japanese financial year, April 1st. The four-decade-old pricing system was broken last year, spurring demand for cargoes settled on the cash market, after steel mills failed to make agreement with the three largest suppliers.

Contract prices may go up 10 percent to 40 percent on increases in the cash price. The cash price is about 62 percent higher than contract price in the last year. Forecast for the average 2010 cash iron ore price, including freight costs, rose by 20 percent to $111 per metric ton.

Western Australia, the nation’s biggest grain-growing region, may produce less grain from the current crop than a year earlier, in part as dry weather stymies yield potential.

Output of all grains may be 10 million metric tons to 12 million tons, the state’s Department of Agriculture and Food said today in a report on its Web site. Production from the previous harvest was 13.6 million tons, according to data from the Australian Bureau of Agricultural and Resource Economics.

“A late start and below-average rainfall through the April-June period has contributed to lower-than-normal crop potentials through much of the central and north-eastern wheat belt,” the department said. “Whilst most of the wheat belt has had good rain in late June to establish crops, some areas in the central wheat belt are still waiting for falls.”

Wheat is the state’s biggest crop. Grain growers in Australia, the world’s fourth-largest wheat exporter, harvest their current crops starting from about November.

Japan plans to offer loans to power producers in the U.S. and Australia that buy so-called clean coal generators from Japanese manufacturers, according to a government document obtained by Bloomberg News.

Funding from state-owned Japan Bank for International Cooperation would help drive sales of the plants that cost about $3.1 billion apiece, said a senior trade ministry official involved in producing the 113-page draft plan, due to be released today. The ministry said in an e-mail it will brief the media on a report about clean coal at 4:30 p.m. in Tokyo.

Mitsubishi Heavy Industries Ltd. and Hitachi Ltd. compete with General Electric Co. and Germany’s Siemens AG to supply plants that convert coal into gas before generating power, making it easier to trap carbon-dioxide emissions. Japan wants to benefit from new demand for clean energy after world leaders including U.S. President Barack Obama pledged to back technologies that reduce gases blamed for global warming.

“The government’s marketing campaign will be a big plus for Mitsubishi Heavy in the competition to capture the market for ‘green technology,’” said Futoshi Usui, a Tokyo-based analyst at Credit Suisse, who rates the stock “outperform”.