I guess you have all read The Australian today, which talks of...

I guess you have all read The Australian today, which talks of continuing IO demand in China, but is already reducing forecast growth rates in that IO. It also discusses 200M tonnes of IO in stock in China, which will help their next round of price negotiations. I would think there may be similarly sized stockpiles of steel as well.
China has built up a considerable stockpile of iron ore - about 200 million tonnes by last month. This gives the steel industry a buffer from which to press suppliers for lower prices, especially for ore on the spot market, which has already fallen to the same level as the contracted price for ore from Australia, raising questions about the value of entering into longer-term contracts.
Go to: http://www.theaustralian.news.com.au/story/0,25197,24468386-5016653,00.html
Yes, IO demand will continue to grow, but not necessarily in the short term – the increased growth in China is more than likely going to be offset by reduced growth elsewhere. And whilst demand will continue, the real equation is at what price? The buyers will be king through the next few years in a market where there is increasing production coming onstream from Vale, BHP and Rio – and not small quantities.
FMG is trying to ramp up production into a falling market with a mountain of debt and, as I understand it, a lesser quality ore. FMG’s timing is unfortunate, but debt brings both leverage and risk – and suddenly it is risk that is coming to bear.
If they can ride it out, then yes, there may be good times ahead down the track. But I would prefer to pay more in 12 months for the shares when and if they have made it through that period. There remains risk attached to them. Do not pretend otherwise.