With iron ore prices continuing to dominate headlines I thought it would be interesting to revisit some analysis from UBS on the pressure points for producers

James Marlay

Livewire Markets

With iron ore prices continuing to dominate headlines I thought it would be interesting to revisit some analysis from UBS on the pressure points for producers. In March this year Rudi from FNArena (@rudi) shared the first chart attached below (VIEW LINK). It was produced by UBS and shows the cost of production for domestic and some international iron ore producers. At the time all producers were comfortably producing below the spot price for iron ore. However, with the supply response following years of capex and easing demand (relative to production gains) the comfort zone has been somewhat eroded. Evan Lucas from IG (@elucas) has shared the same chart (see chart 2 below), however, it includes a red line showing the current price of iron ore. Lucas says, Breakeven IO plays are fast becoming loss play. UBS est AGO ARI & MGX in the firing line GBG & GRR gone already.


James Marlay
Co Founder
Livewire Markets

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