Iron Ore Nears Cost Support, but Supply Cuts Will Take Time
Dow Jones
Nov 11
0010 GMT - Iron ore is nearing cost support, says Morgan Stanley. Roughly 130 million metric tons of production--about 6.5% of global supply--generate negative operating margins at current prices on Wood Mackenzie's cost curve, MS says. "Recent quarterlies highlight the pressure," it says, noting negative cash margins at Champion Iron's Bloom Lake and Mineral Resources Pilbara Hub operations. "Although prices may be approaching cost support, we expect that any supply curtailments would take time, as shutdown/restart costs and capex deferral can keep marginal tons operating through periods of losses," MS says. Spot iron ore fell by 0.5% Tuesday to $92.80/ton, according to Platts, part of S&P Global Energy.
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