BHP Billiton, Rio Tinto Plc and other major iron ore producers are benefiting from the decline of the Australian dollar, essentially allowing them to get more for their iron ore.
The WSJ reports that the Aussie dollar has dropped 11% over the past three months, down to USD 0.92, which coupled with dropping wage and tax costs, help the iron ore miners sit pretty.
“BHP this year estimated that its annual profit could be bolstered by as much as US$110 million for each one-cent gain in the U.S. currency against the Aussie,” according to the article, although there are of course no guarantees in the future USD-Aussie exchange rate due to volatility.
The WSJ mentions “some commodity analysts have said they see iron ore slumping to US$90 a ton or lower as supply increases and China’s growth continues to soften [while ]UBS analysts have said they expect iron ore to average US$100 a ton between July and September, down from an average US$118 in the preceding three months.”
Chinese steel prices closed flat for the day. The price of iron ore 58% fines from India remained unmoved from the previous day. After a couple of days of improving prices, the price of Chinese HRC held steady. The price of Chinese coking coal was unchanged.
On the LME, the cash price of steel billet rose 5.0 percent to $105.00 per metric ton. The steel billet 3-month price saw little price change last Friday on the LME at $125.00 per metric ton.
The US HRC futures contract 3-month price fell 0.8 percent last Friday to $605.00 per short ton. The spot price of the US HRC futures contract saw essentially no change for the fifth day in a row, remaining around $635.00 per short ton.