FMG production cost $63, page-9

Hi guys, back long into Fmg, I'm an iron ore bull but was put off by the supply side was lucky to get out before the slide waiting for the dust to settle and I may or may not be lucky with timing getting back in. I thought I'd share my two cents regarding grade. This is only my own logic so dyor.

Fmg supplied a huge increase in 58% ore during crash. Fmg is the 'cheapest supplier of lower quality ore. The higher grade producers won't be forced out of the market. It will be the lower grade dso's + high cost magnetite. This gives Fmg the ability it push out other producers of similar grades. This means steel mills will be able to blend ores and steel requiring lower specs but there will be less economic supply of this ore so the ore discount pricing will gravitate more and more towards its steel making potential I.e 58/62. but not exactly due other fixed costs like energy supply. but if it's economic steel mills will do this (what I'm saying is the discount will reduce to previous levels and I disagree with the idea that mills will just cherry pick good grades like the media says) As for dso, there is a lot of iron ore in the world but lts still a finite resource I think Rio only has so much 62% reserves left a few years out prices will need to rise high enough for magnetite to be viable or Africa will need to be developed. I'm willing to risk putting all my profits back into fmg to wait and see. Happy to lose it as well haha

here is a link to show returning discount to more appropriate levels. would be interested to hear shorters opinions. risky but interesting stock (as always)

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