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$19.41 fortescue ltd

IO bottom?, page-30

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redsceptre

5,336 Posts.

66

07/04/15

17:58

Post #: 15045616
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Originally posted by redrockgeo ↑

Is the market still oversupplied - yes.

Is there more iron ore coming onstream - yes, even FMG wants to go from 155mtpa to 180mtpa and is applying for WA government approval to do so.

So is it the bottom - probably not.

Back in 2007 FMG did a presentation which detailed their aggressive expansion plan:

0 to 55mtpa - May 2008
55 to 100mtpa - 2009/2010
100 to 200mtpa
As much, as soon as possible.

In 2009 he was targetting greater production than either BHP or RIO (FMG 195mtpa, BHP 106mtpa, RIO 176mtpa). But since his product quality wasn't as good as ethier he was never going to displace their tonnes in the market, he was just going to supplement. So as soon as you get oversupply customers move up the grade curve, pay less for product, and squeeze out lower grade ores. Clearly FMG couldn't work this out.

In 2011 their expansion strategy was "three hubs, two ports, 355mtpa".

So were BHP and RIO meant to allow him to take market share ?

Expand

Very interesting read the fmg 2011 presentation

Aiming for 355mtpa and lauding spot pricing, and of course celebrating their ability to bring tonnes to market quicker than others. With a side tidbit of government wanting anketell to enable it (Colin wanting more expansion?)

FMG Price at posting: $1.80 Sentiment: Sell Disclosure: Not Held
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Last $19.41		Change 0.420(2.21%)		Mkt cap ! $59.76B

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