‹ Minerals

Hopes fade on Chinese weakness

May 22, 2013

There are several large iron ore projects in the north poised for construction in the next decade. A slumping Chinese economy has pushed iron ore prices into bear market territory and undermined plans.

The National Bureau of Statistics and China Federation of Logistics and Purchasing will release their own PMI survey, with a bigger sample size, on June 1. The official PMI in April was 50.6, down from 50.9 in March.Iron ore will fall another 8 percent in the next several months as steel mills in China, the biggest importer, shut down because of maintenance, power rationing and squeezed profits, according to Deutsche Bank AG. Prices may fall about $10 a dry metric ton in the next couple of months, Ore with 62 percent iron content at the port of Tianjin, a global benchmark, tumbled 22 percent to $123.60 a ton from a 16-month high on Feb. 20, according to The Steel Index Ltd.

Meanwhile the Hopes Advance project in northern Quebec inches toward development. Oceanic Iron Ore Corp. plans a feasibility study this year, with construction beginning in 2014. Tiny Oceanic (ticker FEO on TSX), has a market cap of $25M. The company has identified an amazing 1.5 B tonnes of iron ore as proven and probable reserves with a 25% Fe cut-off.


Hopes Advance is a huge project that looks great on paper. It would make sense in a robust economy. Alas the news from the East is grim, with growth declining from first to second quarter.