Iron ore price, page-37583

Was doing some thinking today about the situation with IO.

'That which cannot continue, will not continue'. With iron ore having lost over half its price in just a few months, we can be assured the price will not fall again by over $100. It's mathematically impossible.

An IO price of US$100/ton is not a disaster. It seems like it now, but our majors are all making handsome money at that price.

Can the IO price fall further? Of course. However, it will flush out higher cost production, whether in China or elsewhere, relatively soon. It may ice the threat from African production. Silver linings. The wheat will be sorted from the chaff. Our big three, are going to be on the right side of that scrap.

We're in an inflationary environment. Post mass fiscal/monetary stimulus coming out of the 2020 economic downturn, we've seen inflation across the board; housing, commodities, crypto etc. In my mind that is still the dominant story.

We have been thrown a curve ball by China. Yet, the steel market still remains robust (high steel prices), they've just kicked the legs out from inputs - in our case iron ore. Economics says that will lead to a shortage of steel (while demand is robust), leading to higher prices. If China refuses to supply, then it will come from other steel producers in the world market. Those other producers will then need more iron ore.

All in all, we've been thrown a curve ball. Even if the market doesn't regain its footing, FMG will be fine at lower prices and as the market recalibrates (they survived the 2014/15 bear market even with much higher debt and less experience), there just may be more volatility ahead. If it does regain its footing relatively quickly, the SP will quickly rip higher. Buy when there's blood in the streets. DYOR.