Seaborne iron ore markets were quiet again on Thursday and showed little sign of movement. Steady may not be good enough for Atlas Iron however, which now expects significant write-downs in the year ending June.

The Kallanish index for 62% Fe Australian fines dropped $0.14/tonne to $67.08/dry metric ton cfr Qingdao. 190,000 tonnes of PB fines sold in tender at $66.06/t with a laycan in 31 May-9 June. On globalOre 105,000t of Carajas fines sold at $86.30/t for delivery in 11-20 May. On the Dalian Commodity Exchange September iron ore settled down CNY 3/t at CNY 481.5/t ($75.60/t), while on the Singapore Exchange June 62% Fe futures settled down $0.08/t at $67.58/t.

Atlas Iron meanwhile is preparing itself for a bad financial year. It warned that it expects its costs, already higher than realised prices, to come in higher than its previous expectations over the financial year ending June 2018. As a result, it also expects to see a non-cash impairment in the region of $75-100 million when it reports its full year results. That poses an interesting dilemma for Mineral resources, which has agreed to buy the company in a deal which values Atlas at around $300m.

Average full cash costs are now expected to hit around AUD 58-59/wet metric ton ($43.56-44.31/wmt) cfr China, compared to its previous expectation of AUD 54-58/wmt. Miner costs have increased as a result of higher fuel and freight costs, which are driven by oil prices. Crude oil prices pushing towards $80/barrel is driving up miner costs, including for the marginal miners who are key to pricing, especially now that the market is tighter than previously expected.

In the March quarter, full cash costs reached AUD 62/wmt, compared to realised prices of AUD 59/wmt. It shipped around 700,000wmt in that quarter. The poor performance underlines the fact that the business will now sink or swim on the back of its lithium and manganese operations, which expect to begin shipping this quarter.