Iron Ore - General Commentary

[Trav.]

So maybe keep an eye on the following companies

BHP, RIO, FMG, CIA all plotted below

 

[Trav.]

or another view

 

[Trav.]

I forgot to mention that I have picked CIA in the yearly competition so make sure you load up !!

 

[Miner]

I forgot to mention that I have picked CIA in the yearly competition so make sure you load up !!

CIA means the same Trump's agency . That's would be challenging..
What's your view on MIN ?

 

[Trav.]

What's your view on MIN ?

@Miner howdy mate.

Fundamentally I have no idea but I am sure that you are all over that side.

Chart wise below is my daily CAM chart. Really nice run in May and tested recent high $19.68 / $19.70 so with good IO prices we could see this trend continue.

Red Bars indicate CAM down - MACD Falling and ADX rising as can be seen in the bottom chart pane

 

[Miner]

@Miner howdy mate.

Fundamentally I have no idea but I am sure that you are all over that side.

Chart wise below is my daily CAM chart. Really nice run in May and tested recent high $19.68 / $19.70 so with good IO prices we could see this trend continue.

Red Bars indicate CAM down - MACD Falling and ADX rising as can be seen in the bottom chart pane

View attachment 103999

Hey @Trav.
I am good mate. A bit exhausted with 2+1 roster due to Corona protection and now to be in minesite for 3 weeks . Have to help the company to reduce AISC of iron ore per ton
Any way, returning to CIA

Did Google now on Champion CIA after reading your post. Ironically while in Canada never searched for this company though knew well about Rio's iron ore mines there.

I found the company increased the wmt but also increased the AISC per ton by 10% even after increasing the recovery by 3%.

So my company has the opportunity to make money if they can keep the recover and reduce the other costs to reduce per ton cost. Point to be noted, it has reportedly not been affected from Corona and still could not cut operational cost.
In addition one of the directors sold out 300000 shares to fund conversion of the options. If I was David and confident of my company's future then would borrow money to convert the options and sell after to get capital gain and more money. But I am a miner and not a director so my logic would not work to make David money
https://www.asx.com.au/asxpdf/20200528/pdf/44j5tmxvtffz36.pdf

 

[frafam]

I am bearish ( for a variety of reasons) about the iron ore price and believe it will drop
over the coming 6 - 12 mths ( considerably).
any suggestions on how to best trade for this possible position ?
eg a covered 'put' ? or are there other alternatives ?
thanks

 

[cutz]

I am bearish ( for a variety of reasons) about the iron ore price and believe it will drop
over the coming 6 - 12 mths ( considerably).
any suggestions on how to best trade for this possible position ?
eg a covered 'put' ? or are there other alternatives ?
thanks

Hello.

You can achieve a covered put payoff with a short call without the hassle of loaning stock to short.

Any reason for a covered put over a straight out short ?

 

[striek]

I would just buy deep OTM puts if you have a really high conviction the stocks will fall and you want more leverage than shorting the stocks directly. A covered put will cap your upside but not your risk if you get it wrong and IO goes up.

A great level of IO price slippage is I believe priced-in already though. The miners are all on track to make enormous profits relative to their market caps so the market clearly doesn't think the EPS (and dividends..) will be stable in the near future. If the price of IO really plunges though the price of some put options will still increase exponentially.

 

[Value Collector]

A great level of IO price slippage is I believe priced-in already though. The miners are all on track to make enormous profits relative to their market caps so the market clearly doesn't think the EPS (and dividends..) will be stable in the near future. If the price of IO really plunges though the price of some put options will still increase exponentially.

Yes, so beware anyone buying Puts that expire before the Iron Ore miners (especially FMG) go Ex dividend, they are currently accumulating huge amounts of cash that will be declared as a dividend, and likely provide a lot of share price support leading up to the ex dividend date at the end of August.

 

[frafam]

Thank you for the comment Cutz.
A covered put is lower risk, i guess, as i have the shares in place if needed
A short call is riskier if i am wrong, but if correct far better result

 

[cutz]

Thank you for the comment Cutz.
A covered put is lower risk, i guess, as i have the shares in place if needed
A short call is riskier if i am wrong, but if correct far better result

Hello.

Both positions carry the same risk profile.

I take it you understand in a covered put position you're short the stock ? Being short stock carries similar risks to short calls..

 

[Sean K]

Anyone have a reliable / respectable analysis of where IO prices are heading? It seems there's a lot of discrepancy between what our Treasury are saying (conservative position) and some of the bullish comments out there.

Here's one from Fitch saying:

Looking beyond this year, Fitch Solutions expects iron-ore prices to follow a multiyear downtrend, and the agency is forecasting prices to decline from an average $160/t this year to $75/t by 2025 and $63/t by 2030.

If this is the case, pure IO plays who have had a huge run up during this cycle could represent a great short opportunity.

 

[Miner]

Anyone have a reliable / respectable analysis of where IO prices are heading? It seems there's a lot of discrepancy between what our Treasury are saying (conservative position) and some of the bullish comments out there.

Here's one from Fitch saying:

Looking beyond this year, Fitch Solutions expects iron-ore prices to follow a multiyear downtrend, and the agency is forecasting prices to decline from an average $160/t this year to $75/t by 2025 and $63/t by 2030.

If this is the case, pure IO plays who have had a huge run up during this cycle could represent a great short opportunity.

Same question with the overnight crash - where iron ore prices are now heading ?
I will be on plane when market opens. Don't want to see the opening ceremony.

 

[greggles]

Slowing Chinese economic growth means less steel and less demand for iron ore. The short to medium term outlook for iron ore is turning bearish.

China’s economic slowdown woes dent benchmark iron ore price

China is facing bigger economic difficulties than in 2020, with some indicators starting to weaken sharply since March, Premier Li Keqiang said.

www.mining.com

The global economy is still teetering on the edge. Are we going to slide into recession or slowly pull ourselves out of the current slump?

 

[divs4ever]

well in my opinion China needed to slow , and focus on eliminating bottlenecks and upgrade anything that needs it , so it could happily tidy up it's own economy and infrastructure , and let the rest of the world reap what it has sown ( Russia chose self-sufficiency so it will be OK )

add in China is looking at expansion in space , keep the West distracted over Taiwan

iron in theory should go back to reality ( maybe $70 a tonne ) and most of the world will wallow in self-pity

sure it will be a nasty hangover , but that is what you get if you party hard all weekend ( decade )

 

[Dona Ferentes]

Overnight 62Fe .... Iron ore -8% to $US112.35 a tonne

but this morning the big boys are up... perhaps this is just a short-term gyration? Talk of a slowdown in China seems to be the biggest factor at play.

 

[Telamelo]

Overnight 62Fe .... Iron ore -8% to $US112.35 a tonne

but this morning the big boys are up... perhaps this is just a short-term gyration? Talk of a slowdown in China seems to be the biggest factor at play.

I don't think iron ore will ever again drop below US$90 a tonne imo which even at that price, still a big cash cow for the big boy's!

 

[qldfrog]

I don't think iron ore will ever again drop below US$90 a tonne imo which even at that price, still a big cash cow for the big boy's!

You could be right especially when you factor 10% plus inflation..
3 years at 90$ and you have lost a third of value...not mentioning mining costs going thru the roof and your profits collapsing
Inflation is a factor most ignored in trading/charting..and we could ..kind of ..in the last decades..but we will need to relearn...

 

[waterbottle]

Overnight 62Fe .... Iron ore -8% to $US112.35 a tonne

but this morning the big boys are up... perhaps this is just a short-term gyration? Talk of a slowdown in China seems to be the biggest factor at play.

Probably more related to market-wide buoyancy as the markets recover from last week's slaughter. Global recession + China lockdown doesn't seem too profitable for iron ore miners.