Why does the price of iron ore depend on the price of Petroleum? What's the matter?
The iron ore shipped Chinese method is the only sea, although many Iron Ore Co are charter, but still have to pay the cost of oil, because the ship shipping Co., a ship can only be shipped 17 tons -25 tons (you can imagine a year at sea is more or less transport of iron ore from the ship, so this) greatly improve the transportation cost, or we simply say a ton of iron ore shipping cost is around $40, but the iron ore to the port price is only $120, see here is not finished yet, some large enterprises have their own Iron Ore Wharf, so the transportation cost to some large iron ore enterprises came to an end. But the small iron ore enterprises no way, they have to pay for iron ore from the pier to the transportation cost of boiler. You can see the price of a ton of iron ore, half of which is the cost of oil. So the price of iron ore is very sensitive to the price of crude oil.
China will need 6 tons of iron ore in 2010, half of which come from Australia and the other half from Brazil. Iron ore is a self excavation cost, that is to say with a bulldozer (diesel) need to dig the ground, forklift (diesel) shovel truck (iron ore, using iron ore loading diesel) on the train, the train (diesel) on processing, the combustion processing (also is, again by diesel) the conveyor belt (to diesel) on the ship. All the cost of the whole process is $20, 90% of which is spent on diesel fuel.
The answer upstairs is not comprehensive enough, so I want to say it more clearly. The relationship between the two is still very large, I used to do iron ore, to explain your problem, we must first understand some data.
