# Iron Ore Broker Report - Pilbara & Sector



## Markcoinoz (31 March 2008)

18 Pages of excellent info.


http://www.capelam.com.au/aurora/assets/user_content/File/IN003_IronOreSectorReview_March08.pdf


Cheers markcoinoz


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## spectrumchaser (2 April 2008)

Neat report Markcoinoz,

    Makes better bed time reading than "Goldilox and the three Bears"


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## Sean K (2 April 2008)

Thanks Mark.

Nice avatar too.


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## Miner (5 April 2008)

Iron ORe and Steel Market

Hi All

I am posting this to highlight the situation with Chinese power and how Indian market policy could affect iron ore markets. It is all driven by the steel prices.

As you are prbably aware of the volume of ships stagnated at CHinese ports not being able to berth due to boycotting of BHP and RIo iron ore by Chinese government.

 It means few things:



Cost of demurrage, lack of cash flow, glut in production due to limited stock pile storage will reflect in first quarter production report very shortly. 

Opportunity  for FMG D) not to FOOS on time due to lack of ships (Force Majeure) - do not misunderstand on my hypothesis (this one) is more tongue and cheek.

Power of muscle and politics China would like to impose on Australia and rest of world. So depending on single product and single nation may be high risk investment for long term.

Chinese government through back door as well as Sino Steel have started to control power on Australian iron ore companies. More power yield.

Even with American recession US is increasingly depending on China - again more power as a purchaser.

Unlike US or Australia - Chinese democratics (!) is always unified with government direction - no opposition. Sorry Libs, Democrats and Green.

*If we look in other major player India. Situation *is not so rosy here. NMDC the major government lobby (traded in stock market) has advocated for steel price rise against government wishes. NMDC produces only 35 MTPA of iron ore.

In response to NMDC appeal here is the report. THis means no iron ore price hike would be done by China to the same extent as it could have been. TO be competitive with Indian steel prices considering any export by indian ore will incur excess levy by indian government as well. In a competitive market Chinese Steel will tend to be cheaper than other nations. Japan is recession, so is USA. So no luck there to hike steel price either.

Here is the extract of news report from Indian finance daily. The big hope to contain the iron ore price. So Government of India will push to bring down the iron ore prices in Indian market at least.

*Steel firms agree to hold prices *

*WITH ITS BACK PUSHED TO THE WALL BY INFLATION, GOVT PULLS OUT ALL THE STOPS 
**
BS Reporters / New Delhi/Kolkata April 3, 2008 *



The steel industry, which has been raising prices, *appears to be bowing to the government’s pressure to reduce prices. Secondary steel producers has assured the government that they would hold the prices to help contain inflation.  * 
In a meeting with steel secretary R S Pandey, they agreed to increase the import of hot rolled coils (HRC) by 0.6 million tonnes to 1.6 million tonnes to augment domestic availability of the alloy.  

Secondary producers – these are mini blast furnace units, sponge iron producers, tinplate and cold rolling units, etc -- usually import 1 million tonne of HRC annually under the advance licence system.  

These producers have been told to buy 1.6 million tonnes and export an equal quantity of finished steel-products. “They have committed to improve domestic availability. If the supply improves, prices will fall,” said Pandey.  

However, holding prices may not help in controlling inflation, since prices are already high. The prices of TMT bars, for instance, have jumped 40 per cent since January to Rs 42,000 a tonne.  

Steel (including iron) has a weight of 3.64 per cent weight in the wholesale price index. Inflation for the week ended March 15 stood at a 13-month high 6.68 per cent.  

*The steel ministry has called the primary steel producers tomorrow to discuss the issue of rising prices. The producers are likely to convey that they would hold prices until the new raw material contracts come into effect.  * 

“If the government does not bring down raw material prices, we cannot do anything. We will have to pass on the raw material price increases to the consumer,” they said. The new coking coal contracts are likely to be negotiated over the next week and iron ore soon after.


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## Markcoinoz (4 May 2008)

Hi Miner,

Thanks for posting.  Some excellent insights there.

The BHP/RIO I/O Contracts according to media reports are expecting an 84% increase which must be in place 30th June deadline.

Your point 4. about the backdoor approach by the Chinese Government is certainly gaining momentum.  CFE's recent contract has been put back a further 30days.  As well, another 10 companies have had to resend their interest in Aus Mining Companies in WA.

More recently, i have been loading up on a few of the Juniors within the I/O industry as i can see a massive influx of cash to tempt some of our future
I/O stars.

IMO, this is the time to be loaded up.
Not leaving the ship as some investors have done.

Cheers markcoinoz


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## Miner (5 May 2008)

Markcoinoz said:


> Hi Miner,
> 
> Thanks for posting.  Some excellent insights there.
> 
> ...





Thanks Mark for your feedback.

Regarding Chinese invasion to Australian industry - we are probably our worst enemies. Some times we tend to be too liberal and short sighted. 
In global AJM Conference on iron and steel in 2007 March I have asked the Chinese Government Representative about its intention to take over small iron ore explorers and producers - he was obvioulsy not commital. The Chinese Government hired a top notch Australian lawyer who was helping them to understand Australian legal loop holes so that they can spread wing over the Australian companies. I asked him also about the big Chinese Claw coming over Australian industries - he smiled with no comment. 

I am not against of internationalism but some times EU style is helpful for us than becoming come buddy we are here to help you to come to my courtyard is a dangerous invitation for long term.

Regards


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## Miner (21 May 2008)

*Re: NSK*



nsk said:


> *OK..**www.9nsk.cn.*ntn SKF FAG NSK timken




WHAT is the message NSK ? Your name is after bearing and the photo says Timken which is another bearing ?
I am confused


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## renim (18 June 2008)

india subsidies internal rice price, so why not iron ore?  that just means less ore on the global stage.


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