Iron Ore Price, page-855

CJ

At $48,50mt, FMG in loss territory unless they have reduced costs substantially.

RIO/BHP's supposed 50.00% margin (BS) not looking so good

At these prices a strategic partner would pay a heavily discounted price to buy into
FMG or if asset sales on the cards, sale value would be well below replacement cost

If a large mill buys in they could potentially ramp up supply even more putting more pressure on IOP and with more than 80.00% of revenue coming from IO for Rio, they will also be in dire straits and reduced dividend payout to shareholders

IO miners all and sundry facing difficult times, some more than others, but profits evaporating fast even for the low cost producers

Mine closures in China not occurring as predicted, post Chinese Lunar new year rally did not eventuate,March rally on return of construction activity did not occur this year, steel output low, steel being dumped at next to nothing by the Chinese

This is the current situation that does not take into account Roy Hill and additional supply from the major players

Maybe the Chinese economists prediction of $35.0mt will not be far off the mark

If this happens and price remains at these levels in the medium to long term, kiss BHP/RIO will be in trouble, especially if the new owners/JV partners of FMG keep pumping out IO

The oversupply will be so great that the stockpiles will be so high that sooner or later the Chinese will stop buying for a time until they consume the stockpiles that will building up

Intersting but painful times coming up for OZ