When will the Iron Ore bubble burst?

[springhill]

Hey Guys was just thinking today bout the number of Iron Ore producers, explorers and wannabes. Things are looking great on the Aussie scene for the time being while Rio, BHP and now FMG have the lions share of IO exported. But with so many mid-caps endevouring to come onstream in the next 3-4 years who the hell is going to use all the IO we are digging out? And at what point do we hit saturation levels and its no longer worth a pinch of ****? I will leave out 2009, obviously it wont be then

On another note where could i find a list of all the companies with IO interests?

 

[Sean K]

Re: When Will Iron Ore Bubble Burst?

There is an Iron Ore thread somewhere discussing IO companies.

Try a search...

 

[2020hindsight]

Re: When Will Iron Ore Bubble Burst?

Well steel is becoming as rare as hen's teeth.

Just to give an idea of the increase in the price of steel in Australia, have a look at the increase in prices this year .....

http://www.onesteel.com/businesses.asp?promotionID=58&businessID=10
go to July2008 Update, you'll find this chart:-

Four increases for Structural (hot rolled) steel ...

18 Feb 18.5%
1 Apr 6%
12 May 13%
16 Jun 17%

try compounding that, and you'll see it's going up like a homesick angel.

Word is there will be another 15% or so at end of this month

PS No doubt Turnbull will blame Wayne Swan , lol

 

[skc]

Re: When Will Iron Ore Bubble Burst?

Has the iron ore bubble burst?

This from the AFR today...

Iron ore past its ‘golden age’: Barnett

West Australian Premier Colin Barnett says the rapid growth in the iron ore industry that helped support the economy is ending and Australia’s chief commodities forecaster says a big destination for the ore, China’s steel-making, will decline.

http://www.afr.com/p/national/iron_ore_past_its_golden_age_barnett_weZ9U1xyJLmvFzhj8elk3K

Why's Gina Reinhart still building Roy Hill?

It's a $9.5B project with $7B in debt. I don't know the detailed economics of the project, but it's supposed to produce 55 mtpa. Well AGO currently produces ~8 mtpa and only has an enterprise value of ~$550m. That's <$70/mtpa, while Roy Hill is going to cost ~$170/mtpa. AGO also have potential expansion opportunities to go up to 45 mtpa. It's producing now so it can sell iron ore at current prices (rather than some unknown price in 2015), and it has far less project development risks. So unless Roy Hill has much longer mine life and higher grade ore, how can it justify the project capital costs?

If Roy Hill doesn't go ahead (either by choice or by the fact that debt finance cannot be arranged), it would symbolically mark the end of the iron ore boom.

 

[divs4ever]

Will the iron ore price crack $100 and trigger more pain for BHP, RIO, MinRes, and Fortescue?​

Will the iron ore price crack $100 and trigger more pain for BHP, RIO, MinRes, and Fortescue?

Iron ore peaked at US$140/t in January but is now closing in on the psychological US$100/t support level, with little technical support until US$80/t. Many producers and research analysts have tipped US$100/t as “cost support”, i.e., a level where the economics of the iron ore market should...

www.marketindex.com.au

this might go some way to explaining the drop this afternoon

i hold MIN ( free-carried' ) and BHP

 

[TimeISmoney]

I might lose some sleep when it gets down around the 80 US bucks.

https://www.bhp.com/news/bhp-insights/2024/07/visualised-chinas-steel-demand-through-time

 

[divs4ever]

i have held most of my iron plays for years

i will be watching for top-up opportunities , but not rushing several holdings are up nicely and i would like extra MGX a bit lower ( i already have an order in for extra GRR , but not quite there yet )

 

[BossMan.]

GFG Alliance cuts 48 jobs at Whyalla steelworks

Almost 50 jobs have been axed at the Whyalla steelworks with its owner GFG Alliance blaming a prolonged downturn in steel market conditions globally.

www.abc.net.au

Interesting, this will absolutely destroy that town if it continues into collapse. Shows how green steel is simply not viable (I believe this was the objective of this steel works).

 

[divs4ever]

i would suggest the iron ore bubble is deflating , now of course IF there was a major war that may reverse the trend and war-ravaged economies would severely slam iron ore demand ( and that would burst the bubble

 

[Smurf1976]

GFG Alliance cuts 48 jobs at Whyalla steelworks

Almost 50 jobs have been axed at the Whyalla steelworks with its owner GFG Alliance blaming a prolonged downturn in steel market conditions globally.

www.abc.net.au

Interesting, this will absolutely destroy that town if it continues into collapse. Shows how green steel is simply not viable (I believe this was the objective of this steel works).

They aren't producing "green steel" yet, it's only a plan at the present time, so the the issue seems to be with the deteriorating economics of the conventional business.

 

[LeFeek]

Good point! I was under the impression they were already transitioning to green steel, but it seems like the conventional business is struggling. Either way, it's devastating for the town and workers affected.

 

[TimeISmoney]

Investors are still collecting up IO miners even though the future prices of IO look bleak, FMG was up the top of the list for the past week.

 

[TimeISmoney]

And here we go already moved to the top of the buy list again @10:44.

 

[divs4ever]

well i am one of the 'accumulators ( of iron ore mid-tier players )

now as i see it , construction is trending down , manufacturing is trending down , so only the prospect of wider ( or more ) wars seems to be the driver of rising demand

so IF Trump is elected does Iron Ore tumble ( assuming they believe Trump will wind down military aggression as a policy )

 

[TimeISmoney]

well i am one of the 'accumulators ( of iron ore mid-tier players )

now as i see it , construction is trending down , manufacturing is trending down , so only the prospect of wider ( or more ) wars seems to be the driver of rising demand

so IF Trump is elected does Iron Ore tumble ( assuming they believe Trump will wind down military aggression as a policy )

Bloomberg put an article out that China is trying to save the real estate market by buying up unsold homes, not sure if it will end as intended and China is spending up building some super highways too.

At some point in the future, they're going to have to rebuild parts of Russia and Ukraine, Palestine and possibly some other places. That's going to require a lot of concrete and steel, when that will be who knows?

 

[divs4ever]

Bloomberg put an article out that China is trying to save the real estate market by buying up unsold homes, not sure if it will end as intended and China is spending up building some super highways too.

At some point in the future, they're going to have to rebuild parts of Russia and Ukraine, Palestine and possibly some other places. That's going to require a lot of concrete and steel, when that will be who knows?

yes , but China is more likely to buy extra iron from Russia , India , and Mongolia as they don't need to buy in USD nor shipping lanes to operate freely , land options are possible ( even if more difficult )

look for closer ties between Mongolia and China for extra hints

 

[qldfrog]

yes , but China is more likely to buy extra iron from Russia , India , and Mongolia as they don't need to buy in USD nor shipping lanes to operate freely , land options are possible ( even if more difficult )

look for closer ties between Mongolia and China for extra hints

Mongolia and China are one entity as i discovered working in China with many Mongolians there, another province by many aspects

 

[divs4ever]

Mongolia and China are one entity as i discovered working in China with many Mongolians there, another province by many aspects

in theory , not , but a quick look at the map , and one can see why cooperation would be sensible ( and also with Russia )

now if India and Kashmir were to sort out their differences , interesting things might develop

 

[TimeISmoney]

yes , but China is more likely to buy extra iron from Russia , India , and Mongolia as they don't need to buy in USD nor shipping lanes to operate freely , land options are possible ( even if more difficult )

look for closer ties between Mongolia and China for extra hints

Nothing will change between Mongolia and mainland China, China has been pillaging that area at the same rate for years and they really despise each other. My brother's first wife was a Mongolian whose family forcefully migrated to Hong Kong when it was under the British rule.

They could snuggle up to Russia but unreliable, poorer quality IO, logistical problems, political problems and more game-playing, if it was a good option they would have already done it on a bigger scale and bypassed Australia's IO altogether one would think.

China doesn't have the power that people think it does, ask yourself who is the biggest consumer of their products, the world isn't going to end if the Western world stops buying cheap Chinese junk that ends up in landfills 9 times out of 10. If it's not careful it will end up into another Japan.

 

[divs4ever]

Nothing will change between Mongolia and mainland China, China has been pillaging that area at the same rate for years and they really despise each other. My brother's first wife was a Mongolian whose family forcefully migrated to Hong Kong when it was under the British rule.

They could snuggle up to Russia but unreliable, poorer quality IO, logistical problems, political problems and more game-playing, if it was a good option they would have already done it on a bigger scale and bypassed Australia's IO altogether one would think.

China doesn't have the power that people think it does, ask yourself who is the biggest consumer of their products, the world isn't going to end if the Western world stops buying cheap Chinese junk that ends up in landfills 9 times out of 10. If it's not careful it will end up into another Japan.

well China might 'make cheap ' now

but i went back and studied post WW2 Germany and Japan , both 'made cheap' for quite a while but as time wore on they made better and better quality stuff ( in slightly lesser quantities ) , i suspect China will follow the same path , less output but higher quality/higher selling price and leave 'the cheap end' to South-East Asia