iron ore & china, page-18

You have to really wonder at the projections of some of these analysts,

Goldman Sachs Group Inc says,"averaging $90 in 2015 and $80 in 2016"

So what they are actually saying is that despite increasing costs of production around the world due to inflationary costs, such as increases to develop new projects, increases to costs to produce the product (wages, royalties, taxes) and declining quality of Fe deposits (the easy rich stuff is being mined already), the Fe price will collapse from current levels.

We know China produces more domestically then in imports. So Goldman is saying the majority of Chinese domestic Fe production will be none profitable to produce and a good number of Australian mines as well, despite this they say Iron Ore will average $80 in 2016. So what does China do?, close its mines, continue running at huge losses, face domestic problems from mine closures and unemployment, surrender Fe independence to foreign producers and thus become hostage to them?

This seems to be setting up a world picture in which China allows the dominance of Vale, BHP and Rio and FMG, something that China has tried and is taking steps to change.

All this despite India, China, South Est Asia, Latin America having a long way to go to reach modern standards of development.

Something does not seem right with that picture considering what we know about the Chinese.

IMO will, not happen.