Glasenberg’s madcap manoeuvre, page-6

Squidd, Interesting points!

Why are FMG and Vale the floor? Vale is hard to indicate as their seabourne price is far higher than their domestic price. South america uses most of vale iron ore and as such they don't really come into the equation as much as you'd think.

FMG are precisely who Rio and BHP are trying to knock down IMO. Take their SP down and then absorb the mines are a later date from the creditors. It could fail (this strategy) as their creditors may not want to sell, but rather re-open the mine without the debt obligations when the IO price is higher.

There will be a slew of casualties in the coming year, but most if not all of them will be taken up by the additional RH supply which is 'meant' to target about $55/t @ 55mtpa.

It really is a demand side issue. The reason I see weaker prices is not because of overly huge supply pressures, but we are already in over-supply and chinese housing is taking a hit currently. Stock piles are rising in china, which is a demand fake. Similarly the use of IO stockpiles as 'credit security' also raises a question of real demand vs seabourne demand and whether this will unwind or ramp-up in future.

IO has several risks however these will offer substantial opportunities to those willing to be patient and wait for up-trend signals.