Iron ore dropping

B

blackenator

]http://www.smh.com.au/business/price-drop-signals-the-end-of-the-iron-ore-age-20140912-10fxr7.html[/URL]

Saw this article and was thinking this effects mining ten fold with the price of iron ore dropping will this have a flow on effect to other sectors including property?
 
based on the name of it; I thought this thread might have been about a kangaroo that swallowed a ball-bearing. :D

A couple of the mines announced massive job lay-offs today.
 
Link

Price drop signals the end of the iron ore age


Article%20Lead%20-%20wide6120976310gc2c1410568709199.jpg-620x349.jpg
 
Im working up at one of FMG's biggest camps near the Christmas Creek Mine, there have been lay offs happening for a while around here.

I don't think there should be any big concerns though, the price may have dropped to an all time low. but the days when Iron ore was at record highs i know FMGs cost to produce a ton of product was much higher.
FMG's efficiency has come along way - the ore price might be down but its costing them a lot less to produce so not all negative.

Gina has her Roy Hill project well underway aswell - Im sure she wouldn't be investing into a multi billion dollar project without knowing it was going to work.

Hopefully the price does pick up thought because i think the total cost figure for FMG to produce a ton of iron ore is around the 70$ mark? Thats just what I've heard up on site though so could be way off.
 
When prices were high, all the major mines were expanding. Now, they are shipping out Ore in record tonnes, this I believe also places the downward pressure on Iron Ore prices. The major producers however are still making money.

The negative though, is because the mines are not investing in new infrastructure, it affects engineering firms, forcing engineering firms to reduce rates or cut staff to compete.
 
Dollar should fall too. It generally has a close relationship with our terms of trade.

That could have an effect on interest rates, reducing any pressure to cut rates further and allowing scope to increase rates if necessary.
 
Super boom cycle is over, iron ore will very likely continue its descent, possibly even to historical sub $30 per ton levels. Only survivors may be BHP / RIO and Vale.

In case you guys haven't heard,

They have just announced the uncovering of billions of dollars of fake commodity based trade at Qingdao port in China so importation of commodities into China will slowdown even more.

Coupled with the recent massive takedown in Hebei province China of more than 10 property developers, Macquarie groups 20% stake in Sino Australian *International Trust Company (SATC) is probably going to go poof! as well.

Property prices are now down in 68/70 China major cities including beijing/shanghai and accelerating.

Flow on effects to Australia will be evident pretty soon as happened in 2011-2012 period.

For those who are fully leveraged remember the wise words of WB,

"Only when the tide goes out do you discover who's been swimming naked."
 
KangaBanga said:
Super boom cycle is over, iron ore will very likely continue its descent, possibly even to historical sub $30 per ton levels. Only survivors may be BHP / RIO and Vale.

In case you guys haven't heard,

They have just announced the uncovering of billions of dollars of fake commodity based trade at Qingdao port in China so importation of commodities into China will slowdown even more.

Coupled with the recent massive takedown in Hebei province China of more than 10 property developers, Macquarie groups 20% stake in Sino Australian *International Trust Company (SATC) is probably going to go poof! as well.

Property prices are now down in 68/70 China major cities including beijing/shanghai and accelerating.

Flow on effects to Australia will be evident pretty soon as happened in 2011-2012 period.

For those who are fully leveraged remember the wise words of WB,

"Only when the tide goes out do you discover who's been swimming naked."
Click to expand...

Interesting china has threatened to burst in a while if or when it does Australia will follow. But who I am to know I am just some random guy posting on a form
 
If you were gutsy, this is the time you sell Syd/Melb properties, save up some cash, and buy some distressed assets from various iron ore and coal miners and do a Tinkler.
 
Deltaberry said:
If you were gutsy, this is the time you sell Syd/Melb properties, save up some cash, and buy some distressed assets from various iron ore and coal miners and do a Tinkler.
Click to expand...

no thanks the cyclical time frame for resource markets can be much longer than for property.

What do they say is the cyclical time period for resources? 20 years?

Last big resource boom in Australia was in the 1980's.
 
KangaBanga said:
Super boom cycle is over, iron ore will very likely continue its descent, possibly even to historical sub $30 per ton levels. Only survivors may be BHP / RIO and Vale.



Property prices are now down in 68/70 China major cities including beijing/shanghai and accelerating.
"
Click to expand...

From what I read the bottom line break-even price is just below $50.00 and above $45.00,depending on Labour costs ect,if it goes into $30.00
if one was able to tunnel while looking at the next few years into the future
it may well go like Gold..imho..
 
willair said:
From what I read the bottom line break-even price is just below $50.00 and above $45.00,depending on Labour costs ect,if it goes into $30.00
if one was able to tunnel while looking at the next few years into the future
it may well go like Gold..imho..
Click to expand...

There is still much demand for iron ore in steel for construction. The only demand for gold is in jewellery.

Iron ore won't fall to $30/tonne. In the price descent many miners will be forced to close mines which then limits supply.

We will have to wait and see, but it won't be the end of the world as some are predicting.
 
blackenator said:
]http://www.smh.com.au/business/price-drop-signals-the-end-of-the-iron-ore-age-20140912-10fxr7.html[/URL]

Saw this article and was thinking this effects mining ten fold with the price of iron ore dropping will this have a flow on effect to other sectors including property?
Click to expand...

As one of the other posters inferred correctly, the Aussie$ is somewhat tied to the commodity price, so a fall in coal and iron ore should result in a fall in the dollar. The fall in the dollar makes overseas investment cheaper, so expect more overseas $ into property and shares. This will keep prices from deflating.

Of course, its not always true, as we saw recently [ I think about last year], but now seems to be the case. Historically, over the loing term this has been the case. note that the comparison is often the USD, and America seems to be doing well [ jobs up, gdp output up, etc] and compared to the aussie$, the USD seems a safer and higher growth bet. This also puts a bit more pressure on the US central bank to raise its rates, which tentatively look like it may happen before the aust central bank- RBA- raises theirs. Rate movement and currency are inversely related.
 
hobo-jo said:
It has already fallen further than Gold (as a % from the peak).

Like Gold it is already impacting the marginal producers.

That is nonsense Peter. Please come back to reality.
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Actually not so much compared to its most direct competition - silver and platinum. Unlike those two which have many industrial uses, golds use is fairly limited in an industrial scale- its mostly, but not all of course, in jewellery.
 
JDP1 said:
Actually not so much compared to its most direct competition - silver and platinum. Unlike those two which have many industrial uses, golds use is fairly limited in an industrial scale- its mostly, but not all of course, in jewellery.
Click to expand...
I'm well aware of Gold's uses. Note that I was responding to peter fraser's comment "The only demand for gold is in jewellery" which is factually incorrect. Technically jewellery demand makes up around 50-60%, with industrial & investment demand (coins, bars, ETFs and Central Banks) making up the balance. However, most of the jewellery demand is from China and India, arguably a lot of this is purchased as a store of wealth, a savings vehicle or investment asset, despite it being purchased in the form of jewellery. So even to claim firmly that most is used (only) for jewellery is misleading at best given that it's a mixed use asset.
 
hobo-jo said:
I'm well aware of Gold's uses. Note that I was responding to peter fraser's comment "The only demand for gold is in jewellery" which is factually incorrect. Technically jewellery demand makes up around 50-60%, with industrial & investment demand (coins, bars, ETFs and Central Banks) making up the balance. However, most of the jewellery demand is from China and India, arguably a lot of this is purchased as a store of wealth, a savings vehicle or investment asset, despite it being purchased in the form of jewellery. So even to claim firmly that most is used (only) for jewellery is misleading at best given that it's a mixed use asset.
Click to expand...

ok, I was not including stores of wealth [such as bullion]. I was primarily referring to industrial uses and comparing it to other similar hard assets in the basket like platinum or silver. In that comparison, both platinum and silver have significantly more industrial uses than gold.

By the way, I like your screen name- hobo...despite you dealing with gold/silver bullion. I don't know anyother hobo's that have such a hobby:D
 
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