FMG - Fortescue Ltd

[over9k]

Honestly, I feel like I am talking to children here. None of you have spent one syllable thinking about the demand side of this particular equation. Not one. All I get is stuff about production costs or what have you.

I mean, ****, do ANY of you think that there MIGHT be just a little bit more to it? Even just a little bit?


I have seen econ101 students perform better analysis than this.

 

[sptrawler]

Sure, but they already had the chile mine BEFORE they had the U.S one. Why not just dig another one in chile? It was clearly the better option.

Right?

My guess and adding to @Smurf1976 post :
The USA has a lot of advantages over many other countries. Some that come to mind, in no particular order:

There has obviously been a massive clash of ideologies, the Chinese wanting to bring their poor into a first World standard of living (which they IMO have done an exceptional job of so far), as opposed to the U.S ideology of paying the "high achievers" high wages and holding the sceptre of off shoring to to keep the middle class on the treadmill and the poor don't even rate.

So IMO the next few years is going to be a massive reset for the USA, Trump started it with lets make America great again, but it clashed with the multi nationals still believing it would decimate their bottom line, having to manufacture their stuff in the U.S as opposed to China.

Now along comes the virus and highlights the problem with 100% dependency, on what really is an opposite ideology.
The U.S really has funded China's resurgence at the expense of its own middle class, to turn that around, they can't expect China to help them.
So the only option while they are the powerhouse, is to focus inwardly and be able to compete with China, that is a huge transformation and cultural change.
Also the very change the Trump with all his bumbling was talking about, the guy was a goose, the multi nationals and the media cooked him.
Now they are finding he was right in his basic belief, they have to be able to compete with China and bring manufacturing home, or they have to start teaching mandarin at schools.

 

[Smurf1976]

It is the same reason why multi-billion-dollar car and chip manufacturing companies have literally dozens of multi-billion-dollar new manufacturing plants planned/approved/under construction in the USA & mexico rather than, say, china, which was the place that absolutely everyone wanted to be in previous years.

There is a reason.

The US is a big market and

Make it where you sell it is the new trend.

That thing known as "globalisation" has largely run its course so far as I can work out. That doesn't mean the end of trade but it means it's tapped out as a driver of growth and won't be a focus going forward.

If you want to sell goods in the USA then you'll be wise to make them in the USA or at least an allied country.

If you want to make goods in China then that's because you intend selling them in China or an allied country.

Allied country in that sense means one with similar business costs, economic structure and so on. One where production doesn't gain a cost advantage by means of cheap labour, lack of regulation and so on and any advantage is genuinely due to efficiency and so on.

Etc. That's my perception at least, trade isn't finished but the concept that it ought be unregulated has reached its end.

 

[Smurf1976]

None of you have spent one syllable thinking about the demand side of this particular equation.

Demand within the USA is only relevant in the context of the point being made that "globalisation" has effectively peaked.

In a world of "free" trade, production goes to wherever it's cheapest and if that's some place with basically zero domestic demand then it's irrelevant. Ship the goods to where demand exists.

In a world of restricted trade, you make it where demand exists or you're stuffed as soon as someone else does.

That's the real shift going on. Not simply the location of demand but that production needs to be located where demand exists, goods aren't to be simply made where it's cheapest as that era has now passed its peak.

 

[over9k]

Demand within the USA is only relevant in the context of the point being made that "globalisation" has effectively peaked.

In a world of "free" trade, production goes to wherever it's cheapest and if that's some place with basically zero domestic demand then it's irrelevant. Ship the goods to where demand exists.

In a world of restricted trade, you make it where demand exists or you're stuffed as soon as someone else does.

That's the real shift going on. Not simply the location of demand but that production needs to be located where demand exists, goods aren't to be simply made where it's cheapest as that era has now passed its peak.

Again, only half the story.

Baby bust = demand crash (economic armageddon) internally for any country in which it has occurred.


Hence why japan, korea, germany et al have had to run as export led countries. But when there's not even someone to export to any more...


It's not just build where you sell, it's build where there's actually a market to sell to.

 

[Smurf1976]

Again, only half the story.

Baby bust = demand crash (economic armageddon) internally for any country in which it has occurred.


Hence why japan, korea, germany et al have had to run as export led countries. But when there's not even someone to export to any more...

Agreed it's only half the story.

In a "free trade" world however, demographics is also global so far as goods are concerned since even physically large items can be shipped quite easily and cheaply. Same with many services, they can be offshored.

Restrict trade however, or even give a firm hint that it's going to happen, and that becomes a huge incentive for domestic production since it's that or nothing.

It's not just the US. The EU is coming up with reasons to put tariffs in place for another example. Ostensibly for environmental reasons but ultimately it's saying no to goods from anywhere that doesn't meet EU standards not for the product itself but for the means of production.

 

[over9k]

Agreed it's only half the story.

In a "free trade" world however, demographics is also global so far as goods are concerned since even physically large items can be shipped quite easily and cheaply. Same with many services, they can be offshored.

Restrict trade however, or even give a firm hint that it's going to happen, and that becomes a huge incentive for domestic production since it's that or nothing.

It's not just the US. The EU is coming up with reasons to put tariffs in place for another example. Ostensibly for environmental reasons but ultimately it's saying no to goods from anywhere that doesn't meet EU standards not for the product itself but for the means of production.

Precisely. Hence all the stuff opening up in the USA, not china.

 

[Value Collector]

The new mine is a new investment and the decision will reflect circumstances prevailing at the time.

There's countless examples of "big" projects such as mines, factories and so on that would never be built today but, since they already exist, will operate until the ore runs out or the factory ceases to be profitable and then it's over. At the time they were originally built they seemed like the best option and in many cases they were indeed the best for many years thereafter but they're not now.

As of right now Rio Tinto seems to have concluded that the US is a better option than expanding in Chile. Simple as that. The Chile operation remains because it's already built and can't be unbuilt, the capital can't be recovered and with that considered a sunk cost it's profitable to continue but that doesn't automatically make it the best option for new investment.

Just about everyone does a small version of that in their own life. There's countless things most people own that they continue using because they already have them but no chance they'd buy the exact same product new today.

I agree with everything you said, what I would say though is that the copper mines in Chile are not in that catergory, they are very profitable, and are undergoing further investment to expand and extend life.

 

[Value Collector]

Precisely. Hence all the stuff opening up in the USA, not china.

Some of that is because recently trade has become less free, eg tariffs etc incentivise or punish certain regions, what this means is that manufacturing might move to certain areas that wouldn’t have natural compatible advantages not because of natural market conditions, but because of taxes.

 

[over9k]

Some of that is because recently trade has become less free, eg tariffs etc incentivise or punish certain regions, what this means is that manufacturing might move to certain areas that wouldn’t have natural compatible advantages not because of natural market conditions, but because of taxes.

Contributing factor, yes. Primary factor? I'm doubtful.

Mexico has a very young population. Young people = plenty of labour. China's the opposite, and has a whole stack of old farts that'll need caring for soon (think massive demand for healthcare personnel).

Mexican labour is actually cheaper than chinese labour even now. It's going to be WAY cheaper 5-10 years from now.

 

[Value Collector]

Contributing factor, yes. Primary factor? I'm doubtful.

Mexico has a very young population. Young people = plenty of labour. China's the opposite, and has a whole stack of old farts that'll need caring for soon (think massive demand for healthcare personnel).

Mexican labour is actually cheaper than chinese labour even now. It's going to be WAY cheaper 5-10 years from now.

I think that is why China is moving sweat shops to Africa, the move in China is definitely towards capital intensive rather than labour intensive, which is a good thing, especially for materials companies that supply the steel and copper for the capital investments.

Also, it’s important not to over estimate the effect of an aging population, these things take decades to play out, and over that time a lot changes, I mean it wasn’t that long ago that 90% of the population was working on farms, now less than 1% of the population of developed economies work on farms.

 

[frugal.rock]

Some loose facts.
China changed from 1 child policy to 2 child somewhere around 10? years ago.
More recently (maybe 2 years ago?), they have changed again to up the rate to 3 or more.

For China, that's a fairly quick change in policy shift and it was quite obvious the 1 child policy was hurting.
The single child kids were/ are being spoil rotten by parents and cultural preferences dictated males were the dominant sex preferred in children.

Also, and perhaps little mentioned for obvious reasons, is the fact that national conscription started again in the last few years.

Tie that together with the cost of living and property costs now being very close to, or equal to Western fully developed states.
Property cost in Beijing is well above similar comparisons (units) of those in greater Sydney, for example.
Theres a bigger divide than ever between middle and lower classes, with real wages of lower class keeping them at poverty levels.

Would like to get back to Beijing sometime, but a lot has to change before that can happen.
I don't expect to ever see the parents in law again, due to ageing. ?

 

[qldfrog]

Some loose facts.
China changed from 1 child policy to 2 child somewhere around 10? years ago.
More recently (maybe 2 years ago?), they have changed again to up the rate to 3 or more.

For China, that's a fairly quick change in policy shift and it was quite obvious the 1 child policy was hurting.
The single child kids were/ are being spoil rotten by parents and cultural preferences dictated males were the dominant sex preferred in children.

Also, and perhaps little mentioned for obvious reasons, is the fact that national conscription started again in the last few years.

Tie that together with the cost of living and property costs now being very close to, or equal to Western fully developed states.
Property cost in Beijing is well above similar comparisons (units) of those in greater Sydney, for example.
Theres a bigger divide than ever between middle and lower classes, with real wages of lower class keeping them at poverty levels.

Would like to get back to Beijing sometime, but a lot has to change before that can happen.
I don't expect to ever see the parents in law again, due to ageing. ?

FR, it seems that the OZ gov is releasing a bit their iron curtain: Glasnost in Australia?
getting easier it seems last week to be able to get OUT.
As coming back is still mission impossible, it is a one way trip with maybe possible return so no quick jump in a plane

I know hope to see Dad and in laws alive one last time, they have to hang on 6 months or so

 

[divs4ever]

18 Share Tips – 6 September 2021​

18 Share Tips – 6 September 2021

John Athanasiou, Red Leaf Securities BUY RECOMMENDATIONS Flight Centre Travel Group (FLT) The progress of corporate and leisure travel in the northern hemisphere has been most encouraging. Flight Centre is poised to be one of the biggest beneficiaries of this encouraging trend once Australia...

thebull.com.au

i notice two brokers have a sell recommendation on FMG

bearing FMG goes ex-div. on the 6th ( tomorrow )

is this a potential buy opportunity ??

( after all i was factoring in a $1 div twice a year , when i bought recently )

DYOR

 

[Miner]

18 Share Tips – 6 September 2021​

18 Share Tips – 6 September 2021

John Athanasiou, Red Leaf Securities BUY RECOMMENDATIONS Flight Centre Travel Group (FLT) The progress of corporate and leisure travel in the northern hemisphere has been most encouraging. Flight Centre is poised to be one of the biggest beneficiaries of this encouraging trend once Australia...

thebull.com.au

i notice two brokers have a sell recommendation on FMG

bearing FMG goes ex-div. on the 6th ( tomorrow )

is this a potential buy opportunity ??

( after all i was factoring in a $1 div twice a year , when i bought recently )

DYOR

FMG dived down more than 10 pc or almost equal to the dividend paid .
Did you jump ? I did not as was busy at work without having a chance to check stocks today until now late evening.

 

[qldfrog]

FMG dived down more than 10 pc or almost equal to the dividend paid .
Did you jump ? I did not as was busy at work without having a chance to check stocks today until now late evening.

Would be positive for FMG if it just fall by div.
If i was to buy it, i would want more fall than that.and many would be seller can expect to off load now

 

[divs4ever]

FMG dived down more than 10 pc or almost equal to the dividend paid .
Did you jump ? I did not as was busy at work without having a chance to check stocks today until now late evening.

not yet .

i have a buy order in a little lower than the intra-day low

it dropped closer to 11% early
i was hoping iron ore and a US holiday ( tonight ) would let it slip more

 

[divs4ever]

Would be positive for FMG if it just fall by div.
If i was to buy it, i would want more fall than that.and many would be seller can expect to off load now

i am thinking FMG will be a little bit softer

will be interesting if Twiggy grabs a few more if it does ( although surely he has his mind on other projects currently )

 

[Value Collector]

FMG dived down more than 10 pc or almost equal to the dividend paid .
Did you jump ? I did not as was busy at work without having a chance to check stocks today until now late evening.

Fmg was down $2.22, compared to the dividend and franking of $3.

So that was actually a good result, investors that held over the ex date are now $0.78 per share better off.

 

[divs4ever]

lifted from Commsec​

​

Trade History​

Download CSV
Trade History table

SORTDATE IN ASCENDING ORDER	SORTOPEN $IN ASCENDING ORDER	SORTHIGH $IN ASCENDING ORDER	SORTLOW $IN ASCENDING ORDER	SORTCLOSE $IN ASCENDING ORDER	SORTCHANGE $IN ASCENDING ORDER	SORTCHANGE %IN ASCENDING ORDER	SORTVOLUMEIN ASCENDING ORDER
06/09/2021	18.740	19.170	18.500	18.570	-2.280	-10.94	22,212,797

now this morning Bell's trading ideas is calling FMG a double top with a range of $10.50 to $12

now while i would be very surprised to see FMG drop below $12 ( unless the entire market has crashed as well ) i would probably also delighted to grab some more in that price range

meanwhile i do have an order in today @ $17 but am not expecting for that to get filled today but it has a month to run , maybe i will be lucky

DYOR