Iron ore bounces back. Spot iron ore prices hit a 10-week high overnight of US$58.50 a tonne, up 2.8% from US$56.90, the highest since July 1. The spot price is now up 32% since hitting a decade-low of US$44.10 in early July. Part of the reason for the rise has been the run down of iron ore stocks at Chinese ports — they were 80 million tonnes last Friday according to industry reports. They have been as high as 99 million tonnes a couple of months ago. Meanwhile figures released by the Pilbara Ports Authority showed Australian iron ore exports to China jumped to their highest monthly figure ever in August of 33.9 million tonnes. That was up 15.3% from the 2015 low of 29.4 million tonnes in July. Overall, iron ore exports rose 10.7% in August to 39.17 million tonnes, also the highest monthly total on record. — Glenn Dyer
Nuclear tomfoolery. The South Australian government is kidding itself if it thinks its nuclear fuel cycle inquiry will provide any great clarity on whether the state should go deeper into the sector. The reality from the marketplace is very, very poor for nuclear power. Just take a look at what is happening offshore. Japan’s nuclear power industry remains crippled by regulatory delays, maintenance problems and costs, public concern and suspicion. Just one of Japan’s 50 odd nuclear power stations has been brought on line (last month) more than four years after the Fukushima disaster in March, 2011.
In France, the first new nuclear station for 15 years at Flamanville, is years behind schedule and over budget. Moreover, EDF says the first new station to be built in Britain for years at Hinckley’s Point won’t start generating power at the end of 2023 as planned, but it can’t or won’t give a new date because it has yet to make the final investment decision (it wants investment from China to lessen the enormous 25 billion pound (more than A$50 billion) estimated cost. And, as if this were not enough, E.On SE, one of Germany’s biggest power companies, has abandoned plans to spin off its nuclear power stations because the German government has proposed a new law that would make companies permanently liable for the costs of dismantling any of its seven stations. There had been suggestions E.On was spinning off its nuclear business to avoid the costs of decommissioning the plants. The government’s proposal has made nuclear power stations unsaleable. E.ON will still sell its conventional power operations. It wants to concentrate on renewables, but even that’s causing problems as the oversupply of electricity produced from renewables (and subsequent low prices) has forced the company into write-downs and asset impairments in the “higher single digit billion euro range”, according to the company overnight. — Glenn Dyer
Hard scrabble in UK retailing. Aggressive German grocery discounters Aldi and Lidl continue to cut a swathe through Britain’s struggling supermarket sector. Their aggressive discounting and rapid growth have damaged everyone from market leader Tesco, to upmarket chain Waitrose, Walmart’s UK arm Asda, and overnight the No. 4, Morrisons, reported a 35% fall in interim underlying profits, losses from quitting its small convenience chain and the closure of 11 more outlets and close to A$250 million in losses associated from those moves. Sales also fell 2% as Morrison struggles to make headway against Aldi and Lidl, as well as competitors. Morrisons’ same-store sales fell 2.7%, meanwhile upmarket Waitrose, the UK middle-class’s favourite supermarket chain, had its same-store sales dip 1.3% in the first half after top-line sales rose 1.1%. — Glenn Dyer
China’s car slides continues. For a fifth month in a row, China’s new-car sales fell in August as local and foreign automakers continued to grapple with sluggish demand. Sales of passenger cars fell 3.4% to 1.42 million vehicles, from 1.47 million vehicles in August 2014, according to the government-backed China Association of Automobile Manufacturers. That came after a 6.6% decline in July and a 3.4% fall in June. Combined sales of passenger and commercial vehicles in the country fell 3.0% in August to about 1.66 million vehicles. Most car makers reported weak China sales for August. General Motors Co.’s sales were down 4.8% from a year earlier, Ford Motor Co.’s were off 3.3% and Nissan Motor Co.’s fell 5.5%. In July the Associated cut its 2015 sales growth estimate to 3% from 7%. Meanwhile China’s consumer price inflation rose 2%, thanks to higher pork prices, but producer price deflation continued in August for the 42nd month in a row with the annual rate of 5.9% the deepest since 2009. — Glenn Dyer