when someone says ' they can cure oversupply by stopping producing their 300Mpta' - i laugh and laugh and laugh
time to revisit our business 101 primer - ' the problem of fixed costs.'
AT THE SAME TIME
- in 2004 the world need 300Mtpa in raw steel - by 2012 China has made it 900Mtpa.
So China has led to a roughly 200% increase - of which you can fairly assume that - at normal rates a society of 1bn on a planet of 5bn probably only needs say equal to the other societies,
If it was 2004 that would mean 600Mtpa.
But there's progressive increase in all societies, so I would say 'normal' global raw steel demand is about 700Mtpa.
It takes 1.2mt of iron ore to produce 1Mt of pig iron - so that requires 840Mt of iron ore
So
vale - 510Mtpa from 2017
Rio - 370Mtpa from 2017?
Bhp - 295Mtpa
Fmg - 155Mtpa
then all the rest
1.33Bn tonnes of iron AT LEAST seeking to address a 840Mt demand.
I do expect China will remove some of its internal SOE production once Vale's expansion comes through.
But you will still see rampant oversupply
Unless China or India re-engages in a massive second round of construction - the global iron ore market will collapse in price the next 2 years
The supply will be so abundant there won;t be any 'bid' tension.
all alse being equal, costs will fall into the $us20s - to meet the marginal cost of production of the big 4.
- Forums
- ASX - By Stock
- bhp value closer to 10 than 20
when someone says ' they can cure oversupply by stopping...
-
-
- There are more pages in this discussion • 4 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
Add BHP (ASX) to my watchlist
|
|||||
Last
$43.35 |
Change
-0.390(0.89%) |
Mkt cap ! $221.8B |
Open | High | Low | Value | Volume |
$43.36 | $43.42 | $43.24 | $44.40M | 1.025M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
10 | 2544 | $43.34 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$43.36 | 908 | 6 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
5 | 5654 | 43.310 |
12 | 8041 | 43.300 |
7 | 2589 | 43.290 |
7 | 3256 | 43.280 |
5 | 2047 | 43.270 |
Price($) | Vol. | No. |
---|---|---|
43.320 | 580 | 6 |
43.330 | 2447 | 11 |
43.340 | 42727 | 11 |
43.350 | 2070 | 8 |
43.360 | 2091 | 8 |
Last trade - 10.16am 10/07/2024 (20 minute delay) ? |
Featured News
BHP (ASX) Chart |
The Watchlist
I88
INFINI RESOURCES LIMITED
Charles Armstrong, CEO
Charles Armstrong
CEO
SPONSORED BY The Market Online