how low will they push it?, page-7

Its not that difficult really. You don't even need mumbo jumbo jargon. Plain rational thought in a framework of facts will suffice.

Many people were expecting a rapid rise to the 60c level or higher. When this did not happen the short term traders couldn't wait and decided to exit at the lower level. Some of these traders were silly enough to dump large parcels of 200 000 shares or more in single lots. This trashes the SP and frightens others into selling at even lower prices so that you get the downhill avalanche effect. If they had held off the SP would have kept on rising. That the SP tried to rise several times above 47c is evidence for this. If traders decide to accept a 3c profit rather than a 30c rise then so be it. The consequence is that SP gets swamped. Some buyers will have lost confidence and we will now have to wait till more traders exit.

MGX revenues will not increase significantly until the July pricing formula cuts in. The SP will have to rise to reasonable levels (double to triple) to match the revenue (the PE) by that time. Markets of course always move to try to anticipate such trends. Since Chinese iron ore inventories are already dwindling the prospects for a general increase in demand by mid year are very likely to provide a second layer of support.

It is in Shougang's interest to keep the SP low only if it intends to make a TO offer, and it would need to do this well before June if at all. However, it would not go down well with the FIRB if Shougang was caught manipulating the SP downward. Shougang will therefore confine itself correspondingly. It has already guaranteed itself a continuous supply of ore for years to come and that at a 10% discount to whatever market price prevails.

Juke