cloudovermardigra, page-9

Proffreader

I will help you out.

You are correct.

A high cost producer's share price will rise much more when a commodities price rises and the expectation is that the price will stay high.

The reverse is also true

It is basic mathematics as you have pointed out.

The difficulty is in the expectation of the price staying high. For say copper the experts are still saying prices will fall back so at this stage high cost producers wont get marked up as much as they should and will trade on relatively low PE's.

The same was true in the Iron Ore market 2 years ago. What was say a high cost producer 2 years ago is now just looked at as a big profit earner. No one really cares whether a iron ore producer has a $20 or $30 a ton cost . The focus is all on the absolute profit. Two years ago $30 a ton would have been high cost

In sya the iron ore and coal markets we have seen a drametic chnage in future price