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Heavy matter

The announcement on Tuesday, Oct. 4 of this year's Nobel Physics Prize came as rather a surprise. Not because I missed out, again, but that the Royal Swedish Academy of Sciences elected not to recognize this year's most celebrated scientific discovery: the detection in September 2015 — but announced in February — of gravitational waves by the LIGO collaboration.

Instead, the Academy of Sciences gave half of this year's award to David Thouless, and one-quarter each to Duncan Haldane and Michael Kosterlitz. The three British researchers — who are working at the U.S. universities of Washington, Princeton and Brown, respectively — have been recognized for "theoretical discoveries of topological phase transitions and topological phases of matter."

Topology is the mathematical study of properties that are preserved through the deformation of objects. Using advanced mathematics, the three scientists have been able to create the conditions for controlled defects in condensates, which is a phase that can occur if some matter is cooled too greatly. Matter can have four other states: solid, liquid, gas and plasma, the latter occurring when gas is heated severely. Unlike all the other states of matter, condensates display properties that are not seen anywhere else in nature.

Less of a surprise is that, as Forbes magazine commented, this year's award marks the 24th consecutive year that the Physics prize has been awarded to multiple individuals, and the 53rd time without a female winner.

Rather less predictably, planes have been unable to land at the new airport on the tiny British island of Saint Helena in the south Atlantic. Wind shear makes landing too dangerous, and opening of the airport, costing £280 million, has been delayed until engineers can prevent wind being funneled over the runway by two rocky outcrops.

At the moment there are only 150 tourist beds on the island, and the airport is an integral part of a plan to boost the number of annual visitors to more than 29,000 within 20 years. The island is famous as the place of Napoleon's exile after he lost the Battle of Waterloo in 1815. It was also used by the East India Co. as a staging post on the journey between the U.K. and India. Even with a functioning airport this was an optimistic projection.

The iron ore industry has its share of optimists. The chief executive of Fortescue Metals Group Ltd., Nev Power, this week dismissed concerns about oversupply in the sector. Power takes the view that the prolonged commodity crash is finally giving way to a cyclical upturn. Fortescue's analysis is based on an expectation of stability in Chinese iron ore demand, and that most of the new large iron ore mines have already come on stream.

The bullish overtones coincide with publication of an iron ore report prepared by S&P Global Market Intelligence for the United Nations Conference on Trade and Development (UNCTAD). The organization’s Trust Fund Project on Iron Ore Information identifies a further 115 million to 236 million tonnes per year of mined iron ore capacity coming on stream by end-2018. Some closures will take place but UNCTAD expects a net addition to mined iron ore capacity over the three-year period, although steel production is set to increase at an annual rate of only 0.5% to 1.0% over that period.

The UNCTAD report calculates that 109 Mt/y of iron ore capacity was added in 2015, the 10 largest iron ore producers now account for 62% of total production, and the "big three" companies control almost 63% of the seaborne trade.

The annual report notes that for the first time in decades Chinese crude steel production has fallen, and that excess capacity in the steel industry has risen to 748 Mt from 460 Mt in 2010.

The UNCTAD report forecasts a 2% fall in Chinese steel demand in both 2016 and 2017, and for demand to be flat in 2018. For the rest of the world, UNCTAD expects a 2.5% increase in demand this year, and 3.0% in both 2017 and 2018. This scenario would yield global growth of 0.5% in 2016, 0.8% in 2017 and 1.7% in 2018.

The report reminds us that iron ore prices reached a peak of US$180/t (62% Fe, CFR north China) in early 2008 before collapsing during the global financial crisis. Prices had recovered to almost pre-crisis levels by mid-2011, but subsequently suffered a near five-year bear market to below US$40/t in mid-January this year.

The UNCTAD report finds that the main factor behind the 2011-2016 price malaise was a faster-than-expected increase in the supply of mined iron ore. Prices have since recovered to around US$55/t and we might as well be optimists. As Winston Churchill opined, "It does not seem to be much use to be anything else."