whilst the past 4 days have seen our share price improve remarkably it has been a sad time for long time holders of AGO after the ousting of our former Chairman David Nixon, someone whom I am fortunate to know.
It was a sly and devious last minute maneuver pulled by IMC Group and one which I hope will not be forgotten soon by shareholders.
Amongst the gloomy predictions for future iron ore prices I am sure that you are not interested in reading another one although those of you acquainted with the forward looking operating costs projected by management for Pardoo and Abydos will see them still to be extremely profitable.
Atlas has a great history of meeting and exceeding targets (when not delayed by meddling bureaucracies) and I will be buying AGO all the way up to $4.
More iron ore production cuts on the way Kate Haycock Thursday, 27 November 2008
ABN Amro has joined the ever-growing list of analysts downgrading the iron ore price outlook for the next year and has even estimated the iron ore market to be in surplus next year.
The brokerage said it estimated iron ore could be in surplus to the tune of 60 million tonnes in 2009.
“However, miners tend to cut production of bulk commodities if they can’t sell them,” the bank noted.
“There is no terminal market, and the only place to store the product is at the mine or at the port – which becomes somewhat problematic.”
As a result, more iron ore cuts could be on the way with producers looking to put a floor under price cuts and keep stockpiles low.
ABN said the consumers had already started to cut imports and Chinese iron ore imports were down 22% month-on-month in October and could be down somewhere around 30-40% on previously planned November and December figures.
ABN also noted the average spot price has been at a 20% discount to benchmark prices for the last month.
As a result, the brokerage said it had downgraded its forecasts for the iron ore price for 2009 and 2010 to fall 25%.
However, the bank said with little information to go on for steel production next year, it could also be reasonable to expect iron ore prices to tick up by 5% in 2010 and 2011 as demand increases as bearish sentiment forces mine cutbacks and falling production.
The true picture of Chinese iron ore demand will probably not come until next year after Chinese New Year and when both the Chinese and United States stimulus packages start to, hopefully, take hold.
ABN’s forecast prices for 2010 are now sitting at $US110.24 for fines per unit, with lump at $161.39 per unit – down 5% on current prices.
AGO Price at posting:
65.0¢ Sentiment: Buy Disclosure: Held
