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That's very nice to know Pixel...have been looking at something as an alternative for short term share trades, as opposed to CFD's...will look into OM better.
OM lets me take a dozen bites a day and still sends me only one contract note with one minimum brokerage.
Rio Tinto made a presentation today. I am interested in critiques to their argument. Here is the key data:
Demand for iron ore is going up, India etc developing demand, 80% of population... I don't have much problem with this, but can easily be swayed if you have a better viewpoint (which would not be hard).
Note how the Chinese volume expectation isn't particularly aggressive.
If this is the cost curve evolution, this argues for a sustained and pretty high price for iron ore and solid export value when it is all mixed in, even if some of the high cost miners run at losses but are maintained for strategic purposes etc.
If this is the cost curve evolution, this argues for a sustained and pretty high price for iron ore and solid export value when it is all mixed in, even if some of the high cost miners run at losses but are maintained for strategic purposes etc.
I can see the Chinese doing their counter strategic thing... i.e. securing resources (probably mostly in Africa) and producing at marginal loss for strategic purposes as you say. RIO/BHP's expanding capacity may kill off smaller high cost players, it is not going to deter a State player. The Chineses are probably sending a Xmas thank you card to Andrew Mackenzie and Sam Walsh as we speak for all the cheap capacity.
Hi, Does anyone have a link for tracking the iron ore spot price ?
Charts etc ..
Just a thought but Roy Hill will likely ensure low i.o. prices prices down forever.You mean buy some as an individual?
The first scenario is the cartel structure favoured by various pollies that seeks to protect and include iron ore juniors by pulling back major miner supply expansions. The second is also a cartel but one that results from swift junior rationalisation enabling the major miners to consolidate their pricing power.
In the junior cartel, Australian iron ore produces 837 million tonnes (mt) of iron ore from 2016 onwards. It does so at a slightly improved price for 2016 as oversupply is reduced in the short term by 43 mt as majors retrench. However, as Sino, Roy Hill, Anglo and Vale continue their expansions and Chinese demand keeps falling, the glut builds from 2017 onwards and the price keeps falling. In due course, smaller members of junior cartel require enormous subsidy to stay afloat as they register huge losses year after year in a price environment stuck at $20 and below. It’s either that or the cartel must negotiate spectacularly implausible shared volume cuts across all Australian producers (at least those in the cartel). Trade rules must be junked, Chinese relations destroyed and the WTO as well as ACCC told to piss off. To operate this would require a virtual nationalisation of all players as total transparency governs quotas, otherwise widespread cheating is inevitable, as in OPEC.
In the alternative model, the major cartel, Australian iron produces 880mt in 2016. It does so at an average $10 lower than the junior cartel in that year given the higher supply glut. However, as the 50mt of junior and 165mt of Fortescue production shuts down by 2017 the iron ore price at first stabilises and then slowly rebounds as some pricing power returns to the major producer’s cartel. Iron ore volumes are down to 715mt but the price is trading at $40 per tonne in a rough market balance.
Juxtaposing these two scenarios gives you the following total revenue chart for the sector (and nation):
Well recent moves in the Iron ore price are interesting, back over $70 dollars / tonne today
Interesting is the word. Check the volume spike on SLX vector steel ETF on the 8th of Aug which was the same day that the Chinese called the beginning of the 'steel ice age.'
https://www.google.com/finance?cid=3254555
Definitely interesting. It's like every steel user all of of sudden got the wink and the nod from higher-up's to start building and use steel again. It's really bizarre how the capital investment tap is turned on again just like that...
Did the central bankers, after agreeing to end the currency war, agree to all tell their individual legislators that 'things are slowing, we have no amo left and you all must do something or we risk sliding into a deep deep hole without a ladder out. Just start building infrastructure, anything, get to it!'
Who knows... or may be the crowd finally clicked that holding onto anything physical (i.e. commodities) is better than suffering negative rates?!
Today the iron ore plays are all quite weak despite strong I/O prices so a bit of divergence today.
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