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Iron Ore

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Another interesting perspective on the boom in iron ore . Worth checking out. (in particular note the date)

Iron ore: It's (not) different this time​

There’s a popular assumption that iron ore prices will stay high. But, as Gaurav Sodhi explains, the best solution to high prices is…high prices.

Iron ore: It's (not) different this time

There’s a popular assumption that iron ore prices will stay high. But, as Gaurav Sodhi explains, the best solution to high prices is…high prices. Find out more at Intelligent Investor.
www.intelligentinvestor.com.au
 
to be honest ( and i hold a few iron ore producers ) i can't see why the price is so high , unless everyone is secretly building war machines , where is the steel/iron going , yes this rise is nice for me , but surely this is premature in the mining investment cycle ( or is the market thinking new mining investment will freeze )
 

Iron ore: It's (not) different this time - By Gaurav Sodhi 15 Nov 2010​

The big three iron ore producers – Brazilian giant Vale, Rio Tinto and BHP Billiton – account for over 60% of the world’s traded iron ore supply.​
Iron ore will still be a profitable industry, but despite the bravado of the optimistic, elevated prices never last forever. It’s not different this time.​

Although this story is from 2010 the story remains the same. The only change is that the big 3 have become the big 4 and Australia now outstrips Brazil.

The mean price over the last 12 years has been around US$110/t. The current prices of over US$200/t cant last ... but there is a lot of money to be made before the price drops down below the mean again

  1. Vale – 300 million tonnes. ...
  2. Rio Tinto – 286 million tonnes. ...
  3. BHP – 248 million tonnes. ...
  4. Fortescue Metals Group – 204 million tonnes. ...


The mean price over the last 12 years has been around US$110/t

 
Certainly good economic news.

Iron ore stars in June exports figures​


Jul. 23, 2021, 06:30 AM

Australian exports have been upheld by metalliferous ores in June, with the category showing an 8 per cent increase and a fourth consecutive record month.Head of International Statistics at the Australian Bureau of Statistics (ABS) Andrew Tomadini said overall exports experienced a similar jump.“June 2021 recorded a monthly export value above $40 billion. Exports increased 8 per cent to $41.3 billion, with significant increases in metalliferous ores, coal, non-monetary gold and gas,”

Iron ore stars in June export figures: ABS

Australian exports have been upheld by metalliferous ores in June, with the category showing an 8 per cent increase and a fourth consecutive recor...
markets.businessinsider.com
 
am a little sad i didn't raise my target price on FMG a fair while back

but you try to do what you think is correct

and some lucky holder has my parcel ( oh well i have been lucky elsewhere )

i hope our government doesn't think this rally will last for ever
 
My STO Calls on FMG and BHP are both ITM. Just waiting to see when they get assigned to someone.
Gunnerguy
 
Check out this video, the simple answer is that there is a shortage of iron ore compared to demand, because in a COVID-19 world, much more spending is being diverted to things rather than experiences.

I mean listen to what this video is saying about shipping containers leaving China, those things are 100% steel, and China is having to build so many because they aren’t being returned, not to mention that the products they are filled with are made of steel.

 
awesome more CHEAP shipping containers in the future ( i buy the old ones for storage on a static site )
 
divs4ever said:
awesome more CHEAP shipping containers in the future ( i buy the old ones for storage on a static site )
Click to expand...
Yep, good for the Chinese manufacturers of shipping containers (and the people supplying the iron ore), Bad news for the US shipping container manufacturers.

It’s also obviously not just shipping containers, there is a timber shortage due to super high demand, and if people are buying timber, they will also be buying nails, screws, bolts, saw blades.

not to mention those is happening right across the economy in many sectors, the sectors that are suffering like tourism don’t consume much steel per dollar spent, but those industries that are thriving consume a much higher rate of steel per dollar spent.
 
despite adding via the BHP DRP scheme no longer being in my best interest , i would be willing to add extra BHP at the right price ( say sub $18 )

i am keeping an eye on MGX just in case the share prices slides into an appealing price ( sub 75c ) for me to add extra

i still think this 'commodity boom' has arrived too early in the economic cycle

i doubt GRR sliding back below 15c ( but you never know )

and i suspect MIN will not retrace to my buy-in price , either

now DRR is one that MIGHT come down to my target price ( to add more )

but one should watch closely production and logistics costs
 
What about tomorrow's market as the trend has created from Wuhan lockdown
 
have given up on prediction , i only plan for what i will do if the markets ( and share prices ) move far enough in a direction ( i have a plan for UP and DOWN )

call it a reactive ( but flexible ) style , luckily for me i have been 'cherry-picking ' in the dips

in many cases i will suffer paper losses rather than capital losses ( several holdings are up over 400% .. and have had the original investment capital rescued ) , i will not be bomb-proof ( a total market implosion ) but have some ability to cope wind strong headwinds
 
Miner said:
Iron ore price slumpedvlike mayhem.
What domino effect is going to happen in market with the prices of bhp, Rio and mid caps ?
Click to expand...

Settle down!! I don't think anyone expects iron ore to stay at $200 plus a ton. Everyone knows production cost are around $15 a ton and that all the major players are making decent profits at anything over $70 a ton. The Chinese are fed up with being reamed so naturally they are moving heaven and earth to create alternatives.

I think it would totally unrealistic to expect long term iron prices to be stay over $100 ton. But human nature being what it is everyone on the current gravy train is taking every buck they can.
 
Miner said:
What about tomorrow's market as the trend has created from Wuhan lockdown
Click to expand...
Got lucky after a pretty bad july:
Grr exited after a sl trigger, i had 2 reentry buys to fmg and grr yesterday.
None were executed and were cancelled this morning..
Will be interesting.i suspect the asx might fall today but who knows...
 
No need to get carried away just yet
The average price for the last 12 months has been around US$165/t. The current price is still $25/t over that average price and may even stablise around the current levels in the short term.

It was never possible for the price to stay over $200/t. 12months ago every holder of BHP RIO and FMG would have been over the moon if you told them the price would average US$165/t

The price is unlikely to move under a range of $100/t $120t until the demand for steel drops. With the current infrastructure spend in all major economy countries, the steel demand looks locked in for at least another 12 to 18 months, barring any new major world issues


 
Yep, Agreed.

I think long term Iron Ore will average about $90, but I am enjoying every day that it sits above $100.

The way I see things playing out is that when Iron Ore does eventually correct (Today, Tommorrow or next year no one knows when), we will see a lot of over reaction and panic, Before people slowly realise it’s no the end of the world.

Take FMG for example, it’s currently price as if Iron ore was about $80, but you can bet when the Iron Ore price drops the speculators that have built up on the share register will panic sell, and the share price will drop like a stone for a while until they are replaced by people that have done their Math.
 
gee i don't know if FMG will drop enough to hit my targets , but i waited 4 years for BPT and then it was slide-city , so i kept on adding

but yes i feel commodity prices ( most of them ) are unnaturally high currently

of course from another angle it might look like the US dollar tanking
 
What target do you have on FMG?

last time Iron Ore average $93, FMG paid a dividend of $1.76 for the year, that’s $2.51 including franking.

that’s more than a 10% dividend based on today’s price, and the next dividend is due in a month and likely to be $2 or more, so if you buy today it’s like you are really only paying $22 because you get the dividend shortly, which makes the return at $93 Iron ore price even higher than 10%, and Iron ore price is currently sitting well over $93 building excess dividends for the following dividend.
 
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