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Who will be the first to benefit when ore turns, page-20

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peteai

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26/11/14

17:05

Post #: 14358459
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Originally posted by AnDy62 ↑

Interesting banter, enjoyed it! It's a case study for Resource Economics lectures in years to come isn't it? The demand shock (China) -> big profits -> big investment and firm entry -> supply shock -> prices fall. In some ways it's perfectly rational but there's blood on the streets now. RIO/BHP may be at the bottom of the cost curve, but they were selling for $130/ton at start of the year (say $90/ton margin) at $70/ton make that a margin of $30 (maybe $35 with the much vaunted 25% cost reduction lol). Margins have been owned, 90 to 35, would have to sell triple the product to keep profits constant.... ummm no!

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Is the Goal of BHP and RIO to drive out the high cost iron ore miners, the bulk of which are chinese ?

If that is the case, is it possible the Chinese govt is very happy to play that game.

i.e costs a bit to prop up some chinese miners - but China gets ore at $70 rather than $130

AGO Price at posting: 19.5¢ Sentiment: None Disclosure: Unspecified

GBG Price at posting: 2.5¢ Sentiment: None Disclosure: Unspecified

RIO Price at posting: $58.39 Sentiment: None Disclosure: Unspecified

BHP Price at posting: $32.53 Sentiment: None Disclosure: Not Held

MGX Price at posting: 41.0¢ Sentiment: Hold Disclosure: Held
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