I don’t think we will see $140-$160 iron ore again. I agree re...

I don’t think we will see $140-$160 iron ore again. I agree re chinas economy to a degree. Remembering that while it hasn’t announced a large infrastructure package, it likely will once they go through their budget process and announce the actual measures as opposed to being vague. Residential construction which drove a lot of it will still continue, just not at what it was. Tier 2-3 cities will see the empty or not yet completed finished or bought up.

China still needs to urbanise 150-200m people, that’s a lot of infrastructure. Steel demand likely peaked but this and heavy steel manufacturing which China dominates globally will continue. I don’t see a lot of tonnes displaced overall. I see a floor price circa US$85-$90 for iron ore long term given cost structures. Simandou will likely displace high cost producers in the 90-100 range in the later part of this decade. But ultimately a large portion of marginal supply exists at 80-100. This ultimately protects the high grade scale producers of BHP and secondly RIO. I’ve modelled long term US$90 for BHP and RIOs valuation.

The real gem will be the copper here which the market has underestimated in my view. Coking coal too under ESG (wokeness of governments too) stopping new supply. I personally wouldn’t be surprised if copper went up 50% or more before the decades up. It’ll have to, simply to encourage new supply that’s currently uneconomic.

Banks vs resources - it’s rare you get such a deviation in major miners vs banks. That alone should have been a catalyst for sheep fundies. It wasn’t under US dropped rates and China announced some measures because it finally could without devaluing its currency (more to come in my view). That’s short term trading anyway, and I wouldn’t be buying banks at 15 to 20 plus forward earnings in a sketchy economy.