Iron ore pricd, page-33

Hi Rythex.
If you believe iron ore is in a sustained uptrend then go for it. However that statement alone makes me cautious of you. Commodity prices cycle they always have and always will. History tells you pretty quickly that iron ore cycles between about USD40 and USD200 a tonne for 62% Fe product. I dont believe we are at the end of history so therefore that cycle will continue. So the Grange cost position matters immensely because that is what determines how it performs at the low point of the cycle. At the bottom of the cycle FMG will still be generating cash (only just) whereas GRR will be bleeding cash. So FMG and GRR are fundamentally different companies.
I am very positive towards Grange. But i dont think the price is low enough to buy yet. Grrange has good management and a good board and produce a high quality product. So i look forward to buying when the price is right.
Grange has survived long term sure. But it has had very tough periods if you review history. It has survived (unlike other high cost producers like Atlas and Arrium) because of its premium product (65% Fe pellets) and also its prudent board. The board know this and they make good decisions like keeping a large cash buffer.
To me the Shagang shareholding and the good board members it appoints are one of the positive things Grange has going for it.
Arrium is a good comparison. Arrium produce pellets much like Grange. Arrium went into administration whereas Grange survived.
All of this just highlights what a good company Grange is. But it also highlights the risks Grange faces and that risk needs to be reflected in the share price.