Ann: Quarterly Cashflow Report , page-4

http://www.resourceinvestor.com/2014/05/07/iron-ore-surplus-spurred-by-bhp-seen-shuttering-ch

Ore with 62 percent content delivered to Tianjin lost 21 percent this year to $106 a dry ton, according to data from The Steel Index Ltd. The benchmark price fell to $104.70 on March 10, the lowest level since October 2012. Prices may decline to $95 in the fourth quarter, according to CLSA Ltd., a unit of Citic Securities Co., China’s largest brokerage by market value.

If prices drop to $100, supplies in China may be hurt as domestic mines with high production costs are forced to cut output or close, according to the Bureau of Resources and Energy Economics, Australia’s government forecaster. By comparison, Rio Tinto can be profitable above A$39 ($36), BHP’s break-even is A$41 ($38) and Fortescue’s is A$56, UBS AG estimated.

Global seaborne supplies will increase 126 million tons to 1.38 billion tons this year, Morgan Stanley estimated in a May 5 report. That’ll increase the worldwide surplus to 79 million tons in 2014 from 1 million last year, the bank forecast.

“What’s happening now is the major iron ore producers are bringing considerable new capacity,” Alves said in an interview, citing a rise of about 120 million tons this year and 100 million in 2015. “Most of the tonnage is very competitive.”

Vale’s Expansion

Production at the Rio de Janeiro-based company will rise to about 453 million tons in 2018 compared with 306 million tons last year, Alves told the conference. Vale’s average cost of production in Brazil is $21 to $22 a ton, he said.

“It takes time to absorb all this pickup in iron ore supply,” said Alves, forecasting that China’s imports will rise to more than 900 million tons this year from about 820 million tons last year. “It will make some pressure in terms of price, create some volatility.”

The Tianjin benchmark fell for a fifth month in April, the longest losing run since August 2012, as growth in China slowed and seaborne supplies were seen rising. The price will drop to $100 in the
fourth quarter, according to Goldman