I'm not an ARI holder just now, but had a bit of a look. OK so the iron ore price is down. This is causing a lot of smaller marginal producers who popped up to try to make hay while the sun shone on high ore prices, to shut up shop. Its accelerating. A lot have no other source of income. Especially the low grade producers in China will be feeling pain. China is not well endowed with iron ore. What bit it has is lowish grade. Its best thing is coking coal (anthracite) and bituminous coal.
ARI is an opportunity exporter who is not solely reliant on iron ore. It produces it for its own use and can export too, when the price is right.
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It is not the end of the world if the export market goes off for a while
As a steel producer who has blast furnace capacity much lower input costs for both iron ore and coking coal can only be a big positive. Both input costs have halved. This may also have downstream effects in scrap as well, but the blast furnace division should get quite a boost, other things being equal. About b. time too. Thanks to government initiatives as laid out in recent ARI reports , there are quite a few steel intensive infrastructure projects coming up, for which the ARI reinforcing product is just the ticket. I'd guess the quality is better than the imported product, and with the lower $A the imported product will be dearer here other things being equal. the Koreans etc. will probably be focusing especially on the US market, to get those higher $US.
ARI Price at posting:
20.5¢ Sentiment: None Disclosure: Not Held
