oversold and underrated, page-14

Sorry, I have to step in here to correct some statements.

1. "If there is an oversuply of IO the premium dissapears immidiately."
FACT: Pellet premiums are reduced when IO fines supply rises much more than demand, but the premium rarely disappears and never immediately. And for the record, GRR announced a few weeks ago (mid Sept) that "Savage River pellets continue to attract a premium price relative to daily 62% Fe iron ore fines prices."

2. "be happy if the pallet price will be 110/115 this qtr"
FACT: Possibly, but GRR has contracts that may have protected it somewhat from the temporary IO price drop (which some sources now claim was concerted market manipulation by Chinese steel mills). In any event, IO is back to $110 (for now), so GRR pellet prices might average higher than "110/115 this qtr".

3. "you'll find the market is pricing grr on fair value"
FACT: My experience is that Mr/Ms ASX market doesn't have a clue about fair value -- maybe in the long term averaging, but not over several months. No market is good at pricing fair value, but the ASX is particularly troublesome (but then, that also provides opportunities). In my view (and various expert financial estimates) GRR is undervalued based on its Savage River output, assuming it keeps its production costs in control (an issue due to some ups and downs on costs).

4. "welcome to the world of pallets".
FACT: Sorry for the quip, but GRR does "pellets". Brambles (BXB) does pallets.