MARKETS SPECTATOR: Australia's hot iron

Atlas Iron managing director Ken Brinsden says that Chinese steelmakers show no sign of slackening their thirst for iron ore.

Iron ore stocks at Chinese ports are at their lowest since December 2010, according to data from Shanghai SteelHome Information. Meanwhile, the iron ore price today fell to $127.46 for ore with 62 per cent iron content on the NYMEX Clearport Index.

Brinsden told Business Spectator Chinese domestic iron ore production is not keeping pace with demand, while Vale’s very large ore carriers, at 400,000 deadweight tonnes, are still prevented from delivering iron ore to China. With stockpiles at such low levels, orders for Australian iron ore may rise.

Brinsden says demand for Atlas’ iron ore is good. He can get his iron ore onto ships for between $46 and $50 a tonne. That still gets Atlas a healthy profit.

While Chinese macroeconomic data this month points to a slowing in economic activity, Brinsden says that has yet to be felt by Australian iron ore producers, who are blessed with some of the lowest capital costs of any iron ore miners in the world.

For Atlas, BHP Billiton and Rio Tinto the mentality remains 'produce or die' – but perhaps the iron ore executives are right?