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BHP Billiton admits that iron ore expansion was too fast

Sydney Morning Herald reported that BHP Billiton expanded iron ore production too rapidly, causing the Anglo Australian miner to overlook the underlying growth of its overall business.

However, Mr Andrew Mackenzie CEO of BHP Billiton said that despite the iron ore market facing temporary overcapacity, there was enough demand coming back from China and elsewhere to justify the firm's capacity increase.

Mr Mackenzie said that "We don't quite see the case for the scale of investment we saw in last 10 years. But the base business we built is going to be a strong bedrock for decades to come."

Mr Mackenzie said that “BHP's low production costs would make it easier for the firm to weather any downturn. We are very strongly competitive at prices much lower than today's prices. Crackdown on pollution has forced local steel mills to turn to higher quality material from Australia at the expense of poorer grade supplies from domestic mines and elsewhere.”

Global miners, including BHP, Anglo Australian rival Rio Tinto and Brazil's Vale, have all banked on a sustained increase in iron ore demand from China, ramping up capacity and boosting available seaborne supplies. But a slowdown in China's economic growth to its weakest in 23 years, which has coincided with a surge in new iron ore supplies has sparked warnings of a global oversupply and long-term depressed prices.

BHP, the world's third biggest producer of the steelmaking raw material behind Vale and Rio Tinto, is on track to raise its total annual production to 260 million tonne to 270 million tonnes, up from a planned 217 million tonnes in 2014.

Source – SMH.com
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China steel production to rise through urbanization

Bloomberg reported that BHP Billiton Limited sees steel production in China increasing to 1.1 billion tonnes in the next 10 years as urban development drives long term demand.

Mr Andrew Mackenzie CEO of BHP Billiton said that “China’s urbanization has a long way to run and that is going to require a lot of steel. China produced 779 million tonnes of steel last year.”

China’s Premier Mr Li Keqiang last month called on regional authorities to help stabilize expansion as the nation seeks to meet its economic growth goal of about 7.5%. The world’s second largest economy is projected to grow 7.3% this year, which would be the weakest pace since 1990.

Mr Mackenzie said that “There’s a bit of overcapacity in the property market, which probably led to temporary softening in the demand growth for steel. Hopefully there will be renewed growth, particularly growth in the way of making more use of high quality, low cost iron ore and metallurgical coal produced by Australia. We are ready for that.”

BHP, based in Melbourne raised its full year iron ore output guidance in April to 217 million tonne while Rio Tinto Group posted record Q1 output, swelling supply.

Iron ore, a key steelmaking ingredient, had its sixth straight monthly decline in May, the longest losing streak on record with supplies rising from Australia and Brazil just as demand growth in China cools. Prices may average USD 109 per tonne in 2014 and USD 80 next year.

Mr Mackenzie said that “We probably don’t see the case for quite the scale of investments in growing our iron ore and our metallurgical coal business like we did in the last 10 years.”

Mr Michiel Hovers BHP’s VP for iron ore marketing said that “Demand for iron ore and other commodities needed in new urbanization may be driven by India and South East Asian nations to 2030 as China’s growth moderates. Of the 1.2 billion people forecast to move from rural areas to cities in that period, China will probably account for 240 million.

Mr Mackenzie said that “China is in a transition from an infrastructure driven economy to a consumer economy. There will be short-term volatilities, but longer term things are looking pretty positive in the way they are able to handle this transition.”

Source - Bloomberg
voda
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China cuts scrap imports dramatically in April

It is reported that for the month of April, China’s scrap imports dropped sharply by almost 60% YoY to reach 227,000 tonnes.

It was slashed by 8.4% compared with the figures in the month of March, 2014. For the first four months in 2014, China's total imported steel scrap accumulated at 788,000 tonnes tumbling by 57% YoY.

In the month of April, Japan remained as the top scrap exporter to China with 204,000 tonnes, sliding by 30.1%. South Korea stood at number three exporter to China for steel scrap with 5,000 tonnes, sinking by 41.1% YoY while US was the second largest reduced by 95.7% with 8,000 tonnes only.

It is said that China has cut the import of the steel scrap especially from the US and it would be interesting to observe the imports in the following several months.

Source - www.yieh.com
voda
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ArcelorMittal plans to buy BHP Billiton Nimba iron ore project in Guinea

It is reported that ArcelorMittal has announced to discuss with Australia’s BHP Billiton to acquire the BHP's stake in a major Guinean iron ore deposit, for USD 500 million.

ArcelorMittal is likely to be buyers of BHP Billiton Nimba iron ore project in Guinea.

Meanwhile, BHP Billiton decided to withdraw from the West African iron ore mining plan and sell its holdings of Ning-Mount Nimba in Guinea for 41.3%.

ArcelorMittal has invested in iron ore projects in neighboring Liberia.

Source - www.yieh.com
voda
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Siemens to supply ArcelorMittal Gent with performance enhanced LiquiRob

Belgian steel producer ArcelorMittal Gent has ordered a LiquiRob casting platform robot from Siemens Metals Technologies to be installed on continuous slab caster CC2. It will perform a number of potentially dangerous tasks automatically, including taking samples, measuring temperatures and hydrogen levels at the distributor, as well as ladle lancing. In future, the ladle shroud will also be manipulated with the aid of the LiquiRob. The new casting platform robot is due to go on stream by September 2014, and will also improve work ing safety conditions at the CC2.

1. Casting platform robot to handle all sample manipulation operations at distributor
2. LiquiRob will also perform ladle lancing
3. Ladle shroud to be manipulated with newly designed, patented concept
4. Safety at work will be substantially increased.

ArcelorMittal Gent's integrated production plant is part of the Flat Carbon Europe Division. The company produces some five milli on metric tons of flat steel a year, for example, for the automotive and domestic appliance industries. The steel is produced in LD converters with a tap weight of 300 tonnes and cast by two continuous slab casters. The CC2 casting plant has an annual production capacity of three million metric tons. It produces slab s with a thickness of 220 millimeters in widths ranging from 950 to 2,000 millimeters.

The casting platform robot from Siemens will handle tasks on continuous slab caster CC2 that have previously been performed by the plant personnel. This will increase safety at work and improve the reproducib ility of measurements. In 2013 Siemens modernized the slag stopper system on two ArcelorMittal Gent LD converters, as well as the drive technology in the finishing train of the hot rolling mill.

Source – Strategic Research Institute
voda
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China's April scrap imports total 227000 tonnes

According to Chinese trade statistics made available in Tokyo, China's ferrous scrap imports totaled 227,000 tonnes in April 2014, down 59.4% from the same month of a year ago, when they decreased by 8.4% from a month ago, indicating a decrease for the first time in two months.

Of the total, Japan supplied the largest quantity of 204,000 tonnes or 89.6%, down 30.1% from the same month of a year ago; the USA the second largest of 8,000 tonnes, down 95.7%; and South Korea the third largest of 5,000 tonnes, down 41.1%.

In January to April 2014, China's ferrous scrap imports totaled 788,000 tonnes down 57.0% from the same period of 2013, translating into an annualized 2,360,000 tonnes.

Of the total, Japan supplied the largest amount of 693,000 tonnes or 87.9%, down 35.3% from the same period of 2013; the USA the second largest of 20,000 tonnes or 2.5%, down 95.6%; South Korea the second largest of 20,000 tonnes or 2.5% too, down 41.1%; and Hong Kong the third largest of 19,000 tonnes or 2.4%, down 67.1%.

China's ferrous scrap imports from Japan hold relatively steady on the basis of imports of so called miscellaneous ferrous stuff (ferrous scrap bearing nonferrous metal). As a result, it looks as if China's unipolar concentration of import dependence on Japan is standing out for ferrous scrap.

China's ferrous scrap imports from the world's sources except Japan have fallen markedly since the beginning of 2014, with rising dependence on Japan to the contrary. In fact, though, it is understood that most of China's ferrous scrap imports are made in miscellaneous ferrous stuff. Therefore, there is a strong possibility of slumped ferrous scrap imports into China from Japan for ordinary steel scrap.

Source - The TEX Report
voda
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China's biggest bank slashes iron ore funding

China’s biggest provider of letters of credit for iron ore imports is making it much harder for importers amidst a government crackdown on the use of imports as collateral for financing.

1. Monthly lending quotas have been centralized to the provincial level

2. The China Banking Regulatory Commission has ordered banks to step up risk controls

3. Provincial headquarters sets a quota for local branches in Shandong province. We don’t decide anymore and, of course, the quota is much smaller than previous ones it’s becoming very, very difficult to open letters of credit for iron ore.

4. The Bank of China has also ordered local branches not to open letters of credit if importers haven’t found a buyer for the to be imported ore this will limit stockpiling.

Source - Macrobusiness.com
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Ukraine's crude steel output drop in first 5 months

Ukraine’s crude steel output dropped by 7% during the first five months to 11.38 million tonnes from the same period of last year, according to data released by the Ukrainian association of metal producers Metallurgprom.

During the given period, the country’s output of pig iron stood at 12.01 million tonnes, decreasing by 1%; that of rolled steel is forecasted at 11.38 million tonnes, sliding by 7%, both compared to the figures in the same period a year ago.

Besides, according to the latest expert data, the country’s exports in 2014 are expected to reach 23.6 million tonnes.

Source - www.yieh.com
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voda schreef op 8 juni 2014 15:39:

China's biggest bank slashes iron ore funding

China’s biggest provider of letters of credit for iron ore imports is making it much harder for importers amidst a government crackdown on the use of imports as collateral for financing.

1. Monthly lending quotas have been centralized to the provincial level

2. The China Banking Regulatory Commission has ordered banks to step up risk controls

3. Provincial headquarters sets a quota for local branches in Shandong province. We don’t decide anymore and, of course, the quota is much smaller than previous ones it’s becoming very, very difficult to open letters of credit for iron ore.

4. The Bank of China has also ordered local branches not to open letters of credit if importers haven’t found a buyer for the to be imported ore this will limit stockpiling.

Source - Macrobusiness.com

Haha, u zag dat bericht sneller. :)
Desalniettemin, weer een negatief bericht t.o.v. de staalprijzen.
voda
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China iron ore futures take a breather

Reuters reported that iron ore futures in China edged up as the market stabilized after recent steep falls in prices spurred buying interest in China

Iron ore contract for delivery in September on the Dalian Commodity Exchange closed 0.3% higher at CNY 690 per tonne. The contract rose slightly last week after falling in the prior five weeks.

According to data compiler Steel Index, Benchmark ore with 62% iron content for immediate delivery to China <.IO62-CNI=SI> rose 0.2% to USD 94.50 per tonne on Friday.

A Shanghai-based iron ore trader said that "Supply is still more than demand, but we have probably seen the peak in supply for now and that's helping stabilise the market a bit.”

Spot iron ore prices rose last week after a seven week slide that pulled down the raw material to its weakest since September 2012.

Source – Reuters
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US steel imports market share at 27pct in May - AISI

Based on the Commerce Department’s most recent Steel Import Monitoring and Analysis data, the American Iron and Steel Institute announced that steel import permit applications for the month of May total 3,950,000 net tonnes.

This was a 7% increase from the 3,706,000 permit tonnes recorded in April and a 6% increase from the April Preliminary imports total of 3,726,000 NT. Import permit tonnage for finished steel in May was 2,823,000, up 3% from the preliminary imports total of 2,738,000 in April.

For the first 5 months of 2014 (including May SIMA and April Preliminary), total and finished steel imports were 17,401,000 NT and 12,717,000 NT, respectively, up 31% and 22% from the same period in 2013. The estimated finished steel import market share in May was 27% and is 26% year to date.

Finished steel imports with large increases in May permits vs. the April Preliminary included oil country goods (up 58%), tin plate (up 38%), heavy structural shapes (up 38%), structural pipe and tubing (up 29%), line pipe (up 21%), hot rolled sheets (up 18%), standard pipe (up 15%) and sheets and strip hot dipped galvanized (up 13%). Products with significant YTD increases vs. the same period in 2013 include wire rods (up 94%), plates in coils (up 72%), cold rolled sheets (up 53%),sheets and strip all other metallic coatings (up 46%), hot rolled sheets (39%), sheets and strip hot dipped galvanized (up 38%), mechanical tubing (34%), oil country goods (up 27%), reinforcing bars (up 22%) and cut lengths plates (up 20%).

In May, the largest finished steel import permit applications for offshore countries were for South Korea (556,000 NT, up 39% from April Preliminary), China (297,000 NT down 29%), Turkey (157,000 NT, up 14%), Japan (141,000 NT, down 33%) and Germany (106,000 NT, up 7%). Through the first five months of 2014, the largest offshore suppliers were South Korea (2,124,000 NT, up 40% from the same period in 2013), China (1,281,000 NT, up 72%) and Japan (848,000, up 3%).

Source – Strategic Research Institute
voda
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Rio Tinto's driverless iron ore truck achieves a new milestone

Mining giant Rio Tinto has loaded 200 million tonne of iron ore with its fleet of 53 driverless trucks.

Rio, the world's largest operator of autonomous trucks, said that the milestone was reached at Yandicoogina mine in the Pilbara last month.

Mr Andrew Harding, CEO of iron ore at Rio, said that the autonomous truck fleet delivered significant savings in maintenance, tyre life and fuel.

He said that "These new technologies bring value and productivity benefits through decreased variability, improved schedule efficiency and early identification of bottlenecks in the system."

It comes 13 months after the GPS directed trucks completed the loading of 100 million tonne in April, 2013.

Iron ore prices tumbled 13% in May to around USD 94 per tonne.

Source – The West Australian
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Vale iron ore exports rise by 14pct in April

According to data released by India’s National Union of the Industry of Extraction of Iron and Base Metals (Sinferbase), the mining giant Vale’s iron ore exports totaled 21.95 million tonnes in April, increasing by 14.44% YoY.

In April, the company’s iron roe sold to domestic market totaled 1.34 million tonnes falling by 0.15% YoY.

In the January to April period, the company’s iron ore exports amounted to 88.64 million tonnes, rising by 10.01% YoY.

Source - www.yieh.com
GVteD
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Stahlproduktion in Deutschland legt auch im Mai zu

Nachrichtenagentur: dpa-AFX
| 10.06.2014, 13:44 | 143 Aufrufe | 0 | druckversion
DÜSSELDORF (dpa-AFX) - Die deutsche Stahlbranche hat auch im Mai an die gute Entwicklung der Vormonate angeknüpft. Die Rohstahlproduktion legte verglichen mit dem Vorjahreszeitraum um 7,3 Prozent auf 3,9 Millionen Tonnen zu, wie die Wirtschaftsvereinigung Stahl am Dienstag in Düsseldorf mitteilte. Es war der neunte Monat in Folge, in dem mehr produziert wurde. In den ersten fünf Monaten summierte sich damit die Stahlproduktion in Deutschland auf 18,9 Millionen Tonnen. Das war ein Plus von knapp fünf Prozent im Vergleich zum Vorjahr.
voda
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Aggressive Chinese bookings become Indian steel mills nightmare

Chinese mills have been undergoing depressive pangs with domestic steel price level remaining indolent. However the urge for production has remained undiminished with May production touching 68 million tonne. Surmounting inventory and low demand is veritable ground diversion to export.

In January-April 2014, export shipments already climbed 29% YoY to 25.87 million tonnes, according to the National Development and Reform Commission. At the same time, supplies went up just 19% in the same period last year.

Chinese suppliers can boost export sales thanks to falling finished steel prices: NDRC says a 8% decline was seen from January till April. Steel output, in turn, went up 2.7% YoY to 272 million tonnes.

China exports over 60% in the Asian region and India is majorly exposed. Not surprisingly India has become hunting ground for Chinese mills when the INR strengthens and Indian mills keep prices high.

It is learnt that nearly 300,000 tonne of HRC has been booked since April at price levels of USD 540-545 per tonne CFR Mumbai. Present offer levels are at USD 530-535 per tonne although bookings are scarce.

Plate bookings have been done USD 540-550 per tonne from Chinese mills. However in wide plates Ukrainian rule the roost with offers at USD 560-570 CFR.

In long products the import heat is turning on the Indian mills having remained in enviable for long. Billet offers are going at USD 504-505 per tonne CFR from China.Wire rods booking was done at USD 527-530 per tonne CFR. Rebar nonetheless remains untouched with Ukrainian mills doing business at USD 580-590 per tonne. The main reason being quality specific buyers adhering to Ukrainian material rather than trying Chinese.

Indian mills are offering HRC at INR 36500-37500 per tonne (excl ED and VAT) at Mumbai. Imports have a wafer thin advantage INR 1300-2200 which is not lucrative enough for traders to indulge in heavy bookings. However the trend will certainly reverse in first week of July with the budgetary announcement raising veil of uncertainty. Surprisingly most of the bookings have been done by end users but the traders are keeping fingers crossed in anticipation of import duty hike in budget.

Market is likely to take definite direction after budget (1st week July).

Source - Strategic Research Institute
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Getting steel demand projection right is not an easy exercise

Mr Sushim Banerjee, an expert on Indian steel sector and DG of INSDGA, recently wrote for FE that forecasting steel demand has been a popular theme among analysts and policy planners, but it is a tall task.

He wrote “Of the various techniques followed for this purpose, the one relating to GDP of the country has popular appeal. The advantage of this technique lies in making economic growth (captured comprehensively by GDP) as responsible for the growth of steel consumption. The elasticity component based on a series of two variables over the past two decades (minimum) is applied on the projected GDP in the coming years to arrive at the steel consumption rate.”

The demand projections for a number of other commodities such as petroleum products, cement are also undertaken on the same methodology. One major limitation of this technique is that it does not look at the composition of GDP. Also the intensity of investment is not similar in all product segments.

Thus, if the GDP is contributed more by service sectors and less by the industry sector, the growth may not impact steel consumption growth in the same manner as earlier. In Q2 of FY14 GDP, around 12% is contributed by agriculture, 26% by industry and the balance 62% by the service sector alone.

If this composition continues, the elasticity component of 1.11 is bound to fall sharply as more investment in various elements of service sector (trade and insurance, financing and banking, business services) would have much less steel intensity. This clearly disconnects the strong linkage between steel consumption growth and GDP and should make us rethink on our emphasis on forecasting demand only on GDP growth and look for alternative methods.

The best alternative undoubtedly is the sectoral model where the behavior of steel using major segments is projected on the basis of intensive interaction with the major players in each of these segments, identifying a few economic variables that capture the growth and development of these segments and assessing the growth prospects of these variables.

If lack of investment is plaguing the growth of any of these segments, that would be logically established as a major factor to monitor. The robustness of sectoral model is reflected in evaluating the role of factors other than investment monetary, fiscal and trade-related factors inhibiting the growth prospects of the sectors and to assess if suitable policy decisions can take care of the weaknesses.

The compulsion of the share of manufacturing sector in GDP to be increased from the current 14.6% to 25% in another 10 years time would provide a tremendous push to steel consumption due to its intensive nature.

Accordingly, the nature of analysis is to shift from single-minded pursuit of relating steel demand with GDP to the role of various other macro variables such as industrial growth, capital formation, credit growth, inflation rate, exchange rate in shaping the futuristic behavior of different sectors.

It needs to be appreciated that forecasting demand for a dynamic sector having a complex network of backward and forward linkages with significant implications on employment and income generation cannot be left to a simplistic arithmetical calculation of elasticity with GDP. Growth in domestic product summarizes all economic activities belonging to both steel and non-steel categories.

Source - Financial Express.com
voda
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Indian steelmakers lobbying for removal of 2.5pct import duty on iron ore

ET reported that Indian steelmakers have begun lobbying with the government for an effective raw material policy including removal of 2.5% import duty on iron ore in the face of an ongoing mining crisis.

Mr Jayant Acharya director JSW Steel said that "The industry is operating at 80% capacity utilisation due to constraints in mining. This is also leading to higher domestic prices of iron ore. We should take adequate steps to ensure availability of iron ore. In this context, we should restrict exports of iron ore. The latter only leads to creation more jobs in foreign countries, at the expense of jobs and our manufacturing sector. This is a call we need to take as a nation.”

An official of another private steel major said that "In the present situation of iron ore shortage, government should mull the decision of abolishing the import duty on iron ore. Mining companies are taking undue advantage of scarce supply owing to temporary closure of mines in Odisha due to non renewal of years old leases. This has resulted in iron ore prices shooting up by INR 500 per tonne. Even state owned mining companies have increased the prices. It has a direct impact on steel making costs.”

Source - Economic Times
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JSW and TATA Steel plan to raise iron ore imports this fiscal

BS reported that after seeing a massive fall in 2013 to 2014, India’s iron ore imports are set to increase sharply in 2014 to 2015.

TATA Steel is said to have imported around 30,000 tonne on a trial basis from Australia. JSW Steel is getting its first shipment by the end of this month. It plans to import 500,000 tonne and increase this if spot prices decrease further this year.

Mr Jayant Acharya director of commercial & marketing JSW Steel said that “To start with we are importing high quality ore with 64% and above iron content grades to make up for the shortfall in domestic availability. We are looking at options to import from Australia, South Africa and Canada, as spot prices are USD 90 per tonne to USD 95 per tonne.”

Mr Acharya said that “We are importing high grade ore at almost the same price of lower grades in India and blending these. Using high grade ore, which contains lower alumina and silica, will provide higher yields in our furnaces and improves operational efficiencies. JSW is currently operating at 85% of its capacity at all its steel plants. With the imported ore, it aims to maintain the capacity and increase it further.”

The recent closure of mines in Odisha and continued problems in Goa and Karnataka had resulted in less production of iron ore. A sharp drop in spot prices abroad, coupled with a rising rupee and the increase in domestic ore prices have prompted steel makers to actively pursue its import.

Source - Business Standard
voda
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CISA warns on further dip in iron ore prices

The China Iron and Steel Association monthly report published on June 05 highlighted that

1. Iron ore prices are expected to fall further

2. Steel makers to further cut output

3. Production will decline because of weak demand, thereby reducing demand for iron ore

4. Government restrictions on iron ore financing will push prices lower

Source - www.steelhome.cn/en
China steel information centre and industry database
voda
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Citigroup sees USD 90 as bottom for iron ore prices

Bloomberg reported that according to Citigroup Inc, iron ore will probably find a floor at USD 90 per tonne

Mr Ivan Szpakowski analyst in Shanghai said that prices at USD 90 may put more than a quarter of Chinese capacity out of business and spur production cuts at mines outside the country the biggest user.

He said “That should prevent a sustained decline below USD 90 for the rest of 2014 reiterating USD 100 average forecast for the Q4.”

Mr Szpakowski said that “This surge in supply is peaking in the second quarter and the H2 of the year should see a leveling off referring to shipments. Prices sustained at USD 90 would lead to significant production curtailments.”

However, Mr Szpakowski added "We believe that most Chinese traders consider prices below USD 100 per tonne to represent good value and are likely to increase purchases now that the fall in prices has been arrested. Moreover, while iron ore inventories at mills are not particularly low, steel mills are likely to at least slow the pace of destocking, with even such a modest step representing an improvement in spot market demand."

Iron ore entered a bear market in March and fell below USD 100 last month for the first time since 2012 as top miners including Rio Tinto Limited and BHP Billiton Limited expanded output, betting that rising exports to China would more than offset lower prices.

Source - Bloomberg & Reuters
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