FMG - Fortescue Ltd

[Warren Buffet II]

http://business.smh.com.au/business...20081017-539p.html?page=fullpage#contentSwap2

"At Delong Steel, Han Chunwen and her family are closely watching the three large furnaces that remain in operation. The four smaller furnaces have been shut down for early maintenance and can be restarted within weeks if demand picks up again. But the large furnaces take months to cool and then be cleaned out and started up again. That's something no factory owner would choose to do - unless they think their business is going under.

Andrew Forrest at Fortescue Metals Group also has a direct interest in the smoke that continues to billow from the large blast furnaces at Delong. If they shut down he will have to find another buyer.

The two companies signed a long-term contract that helped place Fortescue on the investor map. But now, just five months after its first cargo load arrived in China, Mr Ding has sacked the hapless manager who signed the deal. The Herald understands that Fortescue contracted to arrange freight for the iron ore deliveries and pass the costs on to Delong Steel. Fortescue locked in the freight costs months ago, when freight rates were high. But the deal now looks expensive because spot market iron ore and freight rates have collapsed and Mr Ding's own customers are deserting him in droves. Mr Ding wants Fortescue to wear the cost of expensive freight before agreeing to take more ore. Fortescue says they are flexible, and they might have no choice."


This company is in big trouble, it would imagine that this will be sold to one of the big ones soon for 2 o 3 billions.

WBII

 

[Frankhalo]

http://business.smh.com.au/business...20081017-539p.html?page=fullpage#contentSwap2

"At Delong Steel, Han Chunwen and her family are closely watching the three large furnaces that remain in operation. The four smaller furnaces have been shut down for early maintenance and can be restarted within weeks if demand picks up again. But the large furnaces take months to cool and then be cleaned out and started up again. That's something no factory owner would choose to do - unless they think their business is going under.

Andrew Forrest at Fortescue Metals Group also has a direct interest in the smoke that continues to billow from the large blast furnaces at Delong. If they shut down he will have to find another buyer.

The two companies signed a long-term contract that helped place Fortescue on the investor map. But now, just five months after its first cargo load arrived in China, Mr Ding has sacked the hapless manager who signed the deal. The Herald understands that Fortescue contracted to arrange freight for the iron ore deliveries and pass the costs on to Delong Steel. Fortescue locked in the freight costs months ago, when freight rates were high. But the deal now looks expensive because spot market iron ore and freight rates have collapsed and Mr Ding's own customers are deserting him in droves. Mr Ding wants Fortescue to wear the cost of expensive freight before agreeing to take more ore. Fortescue says they are flexible, and they might have no choice."


This company is in big trouble, it would imagine that this will be sold to one of the big ones soon for 2 o 3 billions.

WBII

Ok Warren let me get this straight, FMG so far has a customer base of 26 seperate clients including Baosteel the biggest in China, now one of the 26 has cut back on out put and FMG is in big trouble. !!!!

Sorry Warren I find this a ridiculous statment IMO, FMG has been only running for five months now, in a climate thats changed sum what, but yet has meet many milestones and targets.

October 17, 2008

http://steelguru.com/news/index/2008/10/17/NjY5ODU=/FMG_to_go_ahead_with_deliveries_for_China.html]

FMG to go ahead with deliveries for China

It is reported that Fortescue Metals Group Limited has so far loaded 8.536 million tonnes of iron ore onto 52 ships dispatched from Fortescue's Herb Elliott port facility in Western Australia.

After news last week that China would be asking to delay iron ore shipments, Fortescue said all of its iron ore shipments had been accepted by its customers and the company was loading ore as fast as possible.

Fortescue said "Chinese market's motivation to encourage the emergence of Fortescue as a strong new alternative seaborne supplier of iron ore has gained further momentum in the last quarter. It said it expected to be operating at an annual production rate of 45 million tonnes by the end of the year before jumping up to 55 million tonnes from April 2009.

The company said it had USD 624 million cash in had at the end of the September quarter, an increase of USD 432 million on the previous quarter. It said the increase in cash was due to funds from a preference share issue, sales prepayments and from leasing and sales receipts.

Sounds good to me

 

[SenTineL]

I agree Frank, WBII's statement is ridiculous, I think people have to just take a deep breath in this time of turbulance

 

[oldblue]

I read the post to mean that De Long Steel "is in big trouble."

Clarification sought, please.

 

[SM Junkie]

Call me stupid but I'm not getting this slow down or close down of China's steel mills stories that are circulating all the iron ore threads at the moment. (See BHP thread)

So for those that know a lot more than me about China's economy, I have a few questions.

1. I thought that China was more internally driven and therefore more state owned companies. Then why is China the first country talking about closing steel mills?
   
2. I have not heard of China being hit in any other way as a result of the credit crisis, just look at what all the other countries are doing, yet nothing mentioned about China's financial stress?
   
3. I don't hear anything about other businesses closing down, surely steel mills closing would not be in isolation, what about other industries?
   
4. I would think that organisations in crisis firstly start cutting back on staff, hours of operations, skeleton maintenance, etc before they would close their doors?
   
5. I would have thought we would be hearing about industries closing in other countries like the US or UK before someone like China? I find this extremely odd.
   
6. Has anyone heard of the Chinese companies reducing their stock in Australian Mining companies? Surely if there was going to be long term reduction in the demand for ore, they would be reducing their stake in our mining orgs.
   
7. Isn't it just a little ironic that these stories are starting now, given that price negotiations are starting and that there are a couple of junior minors about to hit production?

I'm certainly no expert but I think China are playing silly buggers, there is no logic to what I've been reading and in my world I need to see a correlation with other events and this does not seem to be the case.

 

[Sharks37]

Talk about reading too much into things and seeing shadows in the forest, to mix my metaphores! The various doom & gloom comments in this thread demonstrate to me very nicely the level of hysteria and uncertainty currently pervading the market.

Let's not forget some of the basics:

Even the most bearish of analysts and conservative of institutions such as the IMF & World Bank are forecasting growth in China may slow down to as little as 8% next year. This means demand in China next year will be 8% higher than it is this year, to state the obvious, and at least 8% higher again in 2010. They will need more commodoties to fuel their economic activity.

China is sitting on cash reserves in excess of a trillion $'s, so if any country can afford to give their economy a kickstart its them, that's if they need to actually kickstart it.

Settle your nerves folks, in a couple years' time companies like FMG and some of other solid Aussie miners will seem cheap at today's prices...

 

[alex arigo]

china will slow down but remember india and china will need to consume a lot of iron ore in the long term fmg is a great buy at these levels remember they are going to produce 45 mtpa thats selling for 90 dollers a tone thats 4 billion in revenue and long term goals is 180 mtpa add the numbers your a full to be selling a these prices

 

[agro]

Talk about reading too much into things and seeing shadows in the forest, to mix my metaphores! The various doom & gloom comments in this thread demonstrate to me very nicely the level of hysteria and uncertainty currently pervading the market.

Let's not forget some of the basics:

Even the most bearish of analysts and conservative of institutions such as the IMF & World Bank are forecasting growth in China may slow down to as little as 8% next year. This means demand in China next year will be 8% higher than it is this year, to state the obvious, and at least 8% higher again in 2010. They will need more commodoties to fuel their economic activity.

China is sitting on cash reserves in excess of a trillion $'s, so if any country can afford to give their economy a kickstart its them, that's if they need to actually kickstart it.

Settle your nerves folks, in a couple years' time companies like FMG and some of other solid Aussie miners will seem cheap at today's prices...

china will slow down but remember india and china will need to consume a lot of iron ore in the long term fmg is a great buy at these levels remember they are going to produce 45 mtpa thats selling for 90 dollers a tone thats 4 billion in revenue and long term goals is 180 mtpa add the numbers your a full to be selling a these prices

could not agree any more

i think when people are stirring the pot a bit one needs to be a contrarian investor and buy what they beleive in.

until they start constructing buildings out of plastic they (e.g. china and india) will always need iron ore..

don't look at today, but look to the future

if we see BHP take over our good friends RIO, mark my word, FMG's iron will be in greater demand from China

 

[Sharks37]

Agreed. And look at the various facts that make FMG a good long term prospect, one way or the other:

The Rio deal probably won't go through, so a company like FMG would be a good acquisition for BHP, also considering the synergies to be had from rail networks they are currently fighting over.

FMG is very cleverly positioning itself as the "4th sea-borne iron ore major" for the chinese - it is in the interest of the chinese to ensure FMG succeed.

If not BHP, then one of the chinese steel mills like Baosteel taking a stake in them to ensure long term supply.

And finally, FMG operationally have so far delivered on every promise and performance target they have announced.

I work in manufacturing and I have a lot of respect for what FMG have done operationally - a company I've set as the benchmark to aim for. I have only bought a few shares, and yes at prices higher than they are at present, but I consider these guys to be a blue chip long term investment.

 

[Garpal Gumnut]

I have never held FMG and it is a great regret for me. I was set in pmm, bhp and rio from long ago and did not have the iron back to support another great miner.

Now fmg is back in buying territory.

I do not follow funnymental opinion on stocks.

I enclose a chart which is very interesting. FMG followed a channel up from aug 07 to may 08 when it leapt incredibly to a top exactly the width of the channel it had been in.

It happens like that in Technical Analysis, its much more exciting than annual reports.

It has then fallen through 4 channels and is now half way through the fifth.

I'll be buying it when it reaches the bottom of the last channel.

gg

 

[diliff]

I'll be buying it when it reaches the bottom of the last channel.

gg

Do you really think it will reach around ~1.5? It has fallen like a stone but I doubt it will go quite that far... Of course, if it does, I might be tempted to buy too (assuming the company was still viable that is.. which would be one explanation for it going down that far!!)

 

[jonojpsg]

Do you really think it will reach around ~1.5? It has fallen like a stone but I doubt it will go quite that far... Of course, if it does, I might be tempted to buy too (assuming the company was still viable that is.. which would be one explanation for it going down that far!!)

Gotta remember diliff that gg's buy point might come in a month or two in which case the price would be around $2.50. Channels move up with time.

 

[derty]

gg if you had've looked at that diagram in say early August, would you then have concluded that buying once it reached the bottom of the third channel was in order?

Is there some significance in the number of channels a stock falls through? I am familiar with the concept of a trend channel though are a bit of a noob when it comes to most technical analysis still.

 

[Garpal Gumnut]

Do you really think it will reach around ~1.5? It has fallen like a stone but I doubt it will go quite that far... Of course, if it does, I might be tempted to buy too (assuming the company was still viable that is.. which would be one explanation for it going down that far!!)

Gotta remember diliff that gg's buy point might come in a month or two in which case the price would be around $2.50. Channels move up with time.

gg if you had've looked at that diagram in say early August, would you then have concluded that buying once it reached the bottom of the third channel was in order?

Is there some significance in the number of channels a stock falls through? I am familiar with the concept of a trend channel though are a bit of a noob when it comes to most technical analysis still.

All good points. You would need to confirm with a daily chart. Often the price will hit a channel line. Say its in a long term bear trend, so it will fall to a lower trend line , touch it and then rise and then fall again to touch and rise as confirmation. This didn't happen in early August.

There is much on trend trading on the net, google it, and see.

I enclose a pdf copied from my version of MStock with a basic explanation of the concept.

Some guys say it will go up or down twice the width of the dominant starting channel. This is a crazy bear market so it won't surprise me if I'm peering at fmg between $1.50 and $2.50 as it recovers.

gg

 

[Miner]

http://www.abc.net.au/news/stories/2008/10/20/2396410.htm?section=justin

Secret got exposed. China Demand has slackened means probably another small blood bath on Tuesday

 

[spottygoose]

NMDC Raises Contract Iron-Ore Prices in India by 40% (Update1)

By Debarati Roy

Oct. 20 (Bloomberg) -- NMDC Ltd., India's largest iron-ore producer, raised local prices of the key steelmaking raw material by as much as 40 percent, following global peers and increasing the pressure on mills.

Prices of fines were lifted by as much as 10.5 percent and lumps by as much as 40 percent, Chairman Rana Som said today in a telephone interview from the southern city of Hyderabad, where the company is based. The increase will be backdated to April 1.

NMDC Chairman Rana Som is increasing prices to close the gap with international rivals such as Rio Tinto Group and BHP Billiton Ltd., which have doubled their rates this year. Cia. Vale do Rio Doce, the world's biggest iron-ore producer, wants to charge Asian mills more to match what European steelmakers are paying.

``While others have raised prices substantially, our price increase is not that steep,'' Som said, without specifying the final prices. ``Fines account for most of our sales.''

NMDC charged 1,783 rupees ($37) a ton for iron-ore fines as of Oct. 1 last year.

Indian steelmakers will have to pay more for iron ore even as slowing demand from manufacturers and builders drives down prices and prompts companies including ArcelorMittal to consider output cuts. Global steel production and consumption may slump 5 percent in 2009, Research & Consulting Group AG said Oct 9.

``We've heard NMDC aims to raise prices but there's nothing on paper as yet,'' JSW Steel Ltd.'s Finance Director Seshagiri Rao said today by telephone in Mumbai, where the company is based. An increase in prices ``will put pressure on margins,'' he said.

JSW Steel expects to pay 180 rupees more for each ton of fines, Rao said.

Smaller Furnace

JSW Steel, India's third-biggest producer, pared the size of a new venture by three-quarters to 40 billion rupees ($822 million) and delayed the start of the new 3 million ton blast furnace by two months as it expects demand to remain subdued.

NMDC has raised prices by as much as 40 percent for long-term contracts in India, the Economic Times reported today, without saying where it got the information. The increase may affect local steelmakers such as Ispat Industries Ltd., Essar Steel Ltd., JSW and Rashtriya Ispat Nigam Ltd., the newspaper said.

The price increase of 40 percent will affect less than 1 percent of sales, Som said.

 

[LeeTV]

http://www.abc.net.au/news/stories/2008/10/20/2396410.htm?section=justin

Secret got exposed. China Demand has slackened means probably another small blood bath on Tuesday

Actually I am expecting FMG to rise by around 10 - 15% today on the back of the big miners and the renewed enthusiasm in the US overnight. Soon find out I guess.

 

[shag]

china was always going to slow this quarter, they purposefully slowed it as much as they could so the world could see the place relatively smog free.
this isnt news, its history. if china hits 6p or lower then it will bite.
it didnt rise as much as the other fe plays but it has to soon unless some actual bad news occurs.

 

[Garpal Gumnut]

I have never held FMG and it is a great regret for me. I was set in pmm, bhp and rio from long ago and did not have the iron back to support another great miner.

Now fmg is back in buying territory.

I do not follow funnymental opinion on stocks.

I enclose a chart which is very interesting. FMG followed a channel up from aug 07 to may 08 when it leapt incredibly to a top exactly the width of the channel it had been in.

It happens like that in Technical Analysis, its much more exciting than annual reports.

It has then fallen through 4 channels and is now half way through the fifth.

I'll be buying it when it reaches the bottom of the last channel.

gg

Its closing at lows on v low volume so this technical interpretation sill holds. China., trains, ore, margin loans, annual reports , competent/incompetent managers/directors, sinosteel, rio, bhp, kev07, its all too complicated for a simple technician like me.

This stock appears to be still in a downtrend albeit rising recently but not convincingly.

gg

 

[njc.corp]

Do you really think it will reach around ~1.5? It has fallen like a stone but I doubt it will go quite that far... Of course, if it does, I might be tempted to buy too (assuming the company was still viable that is.. which would be one explanation for it going down that far!!)

have u heard of the term anything can happen-

in this game anything can happen-

i have been taught to focus on the current price-meaning the actual price of actual viewing-

now like i said i have been at the top at the $12+ region-

and now the price is what it is now-

so the question is why cant it go any lower-

i dont have that answer but anything happens wether we have good times or bad times or slowdown's blah blah

besides-the lower it goes the better for the people who missed the boat-their has to be a winner out of this little issue we face-

Thanks

Nick--