Iron ore dropping

[Freckle]

I can't see FMG surviving and Vale is also suffering big time. Rio and BHP will use the supply glut to kill off competition and acquire leases and competing mining operations on the cheap. I expect to see FE62 go below $60/dmt. Rio is still expanding and continues to ramp production. It has production costs of $22/dmt and BHP claim costs around the $40 mark.

My guess is there's another 5 years in this shakeout. Gina's Roy Hill mine comes to mind. She has a fairly close relationship with Rio so I'm wondering how this will play out.

Chanos had a big short play on FMG a while back. I wonder if that is/was still in play. FMG 3.03 predicted to go to 1.80 ouch!

 

[pinkboy]

Take a look at BC Iron (ASX Top 200) chart playing out over the last 8mths. $5.50 down to circa 80c. Talk about little players being squeezed.

pinkboy

 

[willair]

There has been a big downward spike in most high-end miners and it's not going to stop,the price slides as the sell volumes go skyward..imho..

 

[KangaBanga]

Iron ore plunges below $US75 to add to miners? pain

THE price of key Australian export iron ore has plunged below $US75 a tonne for the first time since 2009, placing intense pressure on a number of mid-tier miners.

At the end of the offshore session overnight, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US72.10 a tonne, down 4.2 per cent from its previous close of $US75.10, in one of its worst days for the year.

The sharp descent is the exclamation point to a three-week slump that has seen it give up more than its October gains after that month?s rebound pointed to the prospect of a recovery after a year-long retreat. The commodity has now seen over 47 per cent wiped off its value in 2015, with last night?s losses bringing back memories of the 8.3 per cent retreat on March 10 that first ushered in the bear market.

http://www.theaustralian.com.au/business/mining-energy/iron-ore-plunges-below-us75-to-add-to-miners-pain/story-e6frg9df-1227127746304

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Just an update, how this affects AU property is anyone's guess.

 

[Ausprop]

Take a look at BC Iron (ASX Top 200) chart playing out over the last 8mths. $5.50 down to circa 80c. Talk about little players being squeezed.

pinkboy

didn't they just do a deal to buy out IOH?

 

[KangaBanga]

OPEC has said "NO DEAL" to cutting oil production so its a race to the bottom for both oil and iron ore prices...

Iron ore sub $70 now.

Time to get a spanking new SUV for christmas...

 

[Ausprop]

Time to get a spanking new SUV for christmas...

better do it before the weak dollar drives price of them up. along with oil. and everything else.

 

[Ausprop]

just scored a new contract with an iron ore company, it's a biggie. I don't understand the ins and outs of the macro market but it seems the juggernaut rolls on regardless.

 

[Intrinsic_Value]

very happy to have your view points.

I have exposure to:

Alliance Aviation (fly in fly out + other contracts)
Logicams (software)
Mc Alaleese (transportation)
Mineral Resources (processing + other)
NRW Holdings (purse service provider)
Southern Cross Electrical (engineering)

nice to look at past posts.

Alliance: yes still hold, will not add to the position to risky.
Logicams: yes added on the recent downturn (hope I am right)
Mc Alaeese (been buying all the way down lol)
Mineral resources (cut my loss at 10% a while ago)
NRW Holdings (held for a while, then sold half at a 50% loss)
Southern Cross Electrical (sitting on 40% losses, not adding with all the pain else where)

 

[KangaBanga]

better do it before the weak dollar drives price of them up. along with oil. and everything else.

Iron ores down below $70 now. Oil seems to be dropping a fair bit too.

SUVs should be cheaper to make(cheaper steel) and transport(cheaper oil) to australia, so price might be about the same despite falling dollar..

Hard part is choosing between a Toyota RAV4 or a Mazda CX-5. Maybe they'll get even cheaper when iron ore and oil prices go back down to what they were a decade ago.

Intrinsic value - ouch. Hope you have a sizeable cash hoard, looked pretty rough on the ASX today.

 

[joeExpat]

better do it before the weak dollar drives price of them up. along with oil. and everything else.

What weak dollar ? It?s hardly moved against most currencies, only a couple of percent. Only US made SUVs would have increased much in price, and oil is dropping faster than AUDUSD.

 

[Freckle]

nice to look at past posts.

Alliance: yes still hold, will not add to the position to risky.
Logicams: yes added on the recent downturn (hope I am right)
Mc Alaeese (been buying all the way down lol)
Mineral resources (cut my loss at 10% a while ago)
NRW Holdings (held for a while, then sold half at a 50% loss)
Southern Cross Electrical (sitting on 40% losses, not adding with all the pain else where)

Too many eggs in one basket IV. None of these will recover. Some might be acquired but in general they'll all just drift sideways if not lower still. I feel for you brother

 

[Scott No Mates]

As a wise economist said to a group of us on Friday last, "China's growth has slowed to 7.5% from over 12% pa, their economy is still 50% bigger than it was 5 years ago and we are sending more iron ore over there than at 5 years ago too. They are adding a city the size of Brisbane every month".

Yep, there's a problem.

 

[redwing]

I was emailed this

 

[Freckle]

As a wise economist said to a group of us on Friday last, "China's growth has slowed to 7.5% from over 12% pa, their economy is still 50% bigger than it was 5 years ago and we are sending more iron ore over there than at 5 years ago too. They are adding a city the size of Brisbane every month".

Yep, there's a problem.

I don't know about wise Scotty. If China's doing 7.5% I'm a Scotsman

The problem is consumption is crashing globally and China is in a world of hurt as it tries to reorg it's own consumption to buffer itself from the slowdown. Here in AU we geared up in the belief that China was a 20 yr play at 10%+. Now AU (and many others) have to restructure and redeploy efforts elsewhere. Trouble is there is not much in the way of elsewhere available.

China is a manufacturing hub that needs global growth to remain viable to sustain it's own growth rate above 5%. Global growth is barely positive and deflation is setting in as the negative spiral continues. China printed like there was no tomorrow to cushion the slowdown but by all accounts it looks like it simply dug a deeper hole for itself.

The dominoes are falling....

 

[Freckle]

I was emailed this

Ouch! Northstar resources might be worth a little gamble later on. I see it bounced 11% on Gold swings/manipulation. Anything below $0.90 would be good buying.

 

[Intrinsic_Value]

Too many eggs in one basket IV. None of these will recover. Some might be acquired but in general they'll all just drift sideways if not lower still. I feel for you brother

not a case of too many eggs in one basket. I have numerous other stock positions.

the problem is these positions are being whacked so much that it has a significant effect on the overall portfolio.

I have moved to a more defensive position. kept the above positions, but sold many other stock positions.

might be a case of selling the winners and keeping the looses, but for most of the above, they are selling significantly below nta. so if they don't blow up, they will recover somewhat.

 

[Deltaberry]

As a wise economist said to a group of us on Friday last, "China's growth has slowed to 7.5% from over 12% pa, their economy is still 50% bigger than it was 5 years ago and we are sending more iron ore over there than at 5 years ago too. They are adding a city the size of Brisbane every month".

Yep, there's a problem.

No concern of a slowdown. The amount of hard liquid cash flowing around (debt free) staggers me. We must be understating our GDP.

 

[unloadmymind]

As a wise economist said to a group of us on Friday last, "China's growth has slowed to 7.5% from over 12% pa, their economy is still 50% bigger than it was 5 years ago and we are sending more iron ore over there than at 5 years ago too. They are adding a city the size of Brisbane every month".

Yep, there's a problem.

From El Capitan Stevo:

AFR: As you know, the terms of trade are always a big topic in Canberra in terms of the effect on the budget. A bit like the oil story, you've got supply boosting shipments of iron ore and coal from BHP and Rio Tinto. How much is that playing into the weakness in prices?

MR STEVENS: Clearly, supply is a big factor here -- and it's our supply, as it turns out, or a couple of our major companies' supply. So, if you thought there was going to be a higher level of long-run demand and quite rapid growth in the short run of demand, and asked, who is going to be the guy that gets to supply that? It turns out it was us. Which has to be better than some of the alternatives of letting suppliers located in other countries get it. So that, it seems to me, has been a positive for Australia. The prices have come down quite a lot lately and probably not many people will have predicted the extent of that in such a short time. I'm no expert in the economics of iron ore but my understanding is certainly those two large producers are still quite profitable at these prices or even lower.

What other things are going on in that market, in terms of strategic behaviour and so on? Well, you know, I'm not qualified to really comment on that. But the big picture is, I think; there has been a step-up in the global demand for these products. Sure, we can't be 100 per cent certain exactly what pace that will grow in the future. But there has been a big step-up in that demand of historic proportions and it turns out our companies are leading the charge to be the suppliers. That's a good story, isn't it?

and here:

In the September quarter - that's the same quarter Australia shifted into an "income recession" - exports of iron ore to China were up 33% from a year earlier, according to Westpac and the Bureau of Energy and Resources Economics (BREE). This followed a 32% jump the first quarter and a 36% leap in the second.

These are extraordinary numbers and we should not be at all surprised when they start to slow. But, for now, Chinese demand continues unabated.

In a sense this is not difficult to understand. The law of demand says that when the price falls, the quantity demanded will increase. The price of iron ore is down nearly 50% since the beginning of the year.

And while growth in China is now 7.3%, the slowest pace in five years, that?s coming off an ever-larger base. In terms of the number of dollars being added to the economy each year, 7.3% growth now is more than a match for 8% a couple years ago.

http://www.propertyobserver.com.au/...-doomsayers-overlook-strong-fundamentals.html

 

[Freckle]

In the September quarter - that's the same quarter Australia shifted into an "income recession" - exports of iron ore to China were up 33% from a year earlier, according to Westpac and the Bureau of Energy and Resources Economics (BREE). This followed a 32% jump the first quarter and a 36% leap in the second.

BS figures...

A couple of problems with these figures. You have a 50%+ decline in prices. So you need to double volumes just to stay equal yet they are claiming a 30% jump in dollar values...

Absolute BS.