sp depressed ahead of restocking , page-14

Good post Legume,

There is a floor price as there is with everything. Its the point at which it simply not profitable to produce a product. Working it out is the problem. And just because a floor may be breached that does not mean the theory or premise is wrong. China is a high cost producer and its only getting more expensive because of their low quality Fe deposits.

From mining.com

"Not one Chinese iron mine makes money at $80"

Whatever the new floor turns out to be – and it seems more and more unlikely that it will be as robust as $120 – China has an interest in seeing that it does not go too low:

China still sucks in the stuff, albeit more slowly. And it is happy with the rate: a low price is not in its short term interests. That is because, as well as being the world’s biggest consumer, China is also a producer. Its myriad small miners, which already contend with low-grade deposits, are less efficient than global peers. Spot prices of $90-$100/t in 2008 had half of China’s iron ore industry running at a loss, notes Raw Materials Group. Their cost today is between $80-$170/t.

For comparison, it costs BHP and Rio between $40-$50/t to land ore in China. Chinese ore output could fall from last year’s 320m tonnes to 120m-200m in 2020, RMG estimates.

Neither is the outlook for China's mines getting any better. The iron content of domestic ore currently stands at only 20%, down significantly from 30% in 2004 and on its way to 15% according to research by investment bank Standard Chartered."

http://www.mining.com/not-one-chinese-iron-mine-makes-money-at-80-theres-your-new-price-floor-47859/?utm_source=digest-en-mining-121005&utm_medium=email&utm_campaign=digest