resources demand, page-11

er6n
Agree with your Fridays post, we need to see a change quick smart, I was sure the change and dip in high yielding stocks would bring the $ into the miners but does not look like its panning out that why, at the moment anyway.

These are my thoughts on IO future prices and how human nature adjusts to change, I"ll use RIO as and example and would love opinions:

RIO's cost of production is $40-$50T, Ten years ago im sure there cost was not $40-$50T when the IO price was around US $15T ?

Ten years ago a barrel of oil was US$20 a barrel, Today almost US$100

The dynamics of the global economy have changed and cycles are not what they once were prior to 2000.

OPEC controls the price of oil by lowering or increasing production, does anyone see the price of oil falling to US$50 a barrel ? I don't, Do you think you will drive and see your local service station price board displaying 49.9 cents per litre, Even with the new kid on the block (shale) prices will never stoop that low.

Iron Ore, Some analyst are saying long term prices of $60-$70 or $80 tonne, Extremely short term bounce possible but to be sitting on those prices what a absolute joke.
Lets take those analyst view of $60-$70 tonne what would that do.....It would wipe out all IO miners in Australia apart from RIO, BHP, FMG and the hundred's of others worldwide, Now I wonder what that would do for IO prices, push them up or down......mmmmmm, yes pushes them way up just the same way as coles and Woolworth's control the grocery market.
I am sure China would love that NOT, They would prefer to have choice and deal with the likes of AGO as opposed to only having RIO, BHP & FMG.

If prices were to drop to those above levels for sustained periods then just like 10-15 years ago when RIO was producing and IO was at $15T People and companies adjust to change and find ways too quick smart, For the specie miners, there out before they even have a chance, but AGO is will equipped at this stage to adjust to those changes.

China growth is stabilizing and will be leading IO consumption for the next 15-20yrs, We have seen the worst in Europe and expect a recovery to begin at end of 2013, The US is on the growth path, This is good reason for the 15-20yr growth in China. We will slowly see the transition move to India and most likely see in India the same development we have seen in China. Lets no forget Japan is the worlds 3rd largest economy and there going full steam ahead.
IO at US$80-$70 Tonne would not even sustain Chinese IO producers, will they shut down there own miners ?

These are just some of my opinions as to why IO will never go under $80T for any sustained period.