My thoughts:
China (only 55% urbanised)
Currency devaluation movement.
China injects money into banks to spur sluggish economy - 100 billion.
China stimulating economy.
My bet is investors will go back to basics eg Infrastructure and housing market following the recent share market wobbles.
Africa and UAE
Positive Iron ore outlook for GCC as steel demand growing.
India (only 36% urbanised)
India demand for rapid urbanisation.
Construction of 100 Smart cities on the go as of next year.
Upside is India could very well become China mark 2.
US
US housing starts rose to a near eight-year high in July as builders ramped up construction of single-family homes.
US Rates to rise soon and so the US dollar.
AUD will fall further assisting our local profit margins.
IO demand.
More tonnes (uncompetitive overseas) have come out of market as they have either stopped producing inefficient tonnes, or producing something else such as cosmetics or eggs. Have any expert analysts cared to tally up the offset of exited tonnes recently to the so called extra tonnes they keep reminding the market?
Have any expert analysts projected demand figures for India / Africa as they urbanise assuming a similar growth model to China?
Chinas housing market on the up over the last few months and will no doubt filter through to the 2 tier cities clearing housing inventory.
With government backing to invest back into the 'real' economy, I have no doubt growth will be retained backing infrastructure and improving its housing market of bricks and mortar.
Iron Ore demand will increase. Supply 'issues' i predict will be redundant as of next year. Once Roy Hill flicks the switch this year and progressive tonnes hit the market, the panic doom of the so called 55 tonne supply will fizzle out. What if Roy Hill have production issues and teething problems as they ramp up? As Vale ramps up its own new tonnes, it will also take out inefficient tonnes of its own. More unprofitable tonnes would of also exited the market by then. The big miners will ramp up no different to:
China maintaining a respectable 7% growth
India high growth (10-12%?) each year as it becomes another China.
Africa (10-12%?) high growth each year as it urbanises too.
US recovering.
World growth to stabilise.
When IO turns to the upside which it will because the world can't end forever as its turning a corner, upside will be brutal. Brokers should start upgrading IO Producers soon as the market has again panicked unnecessarily and shorters should be looking elsewhere for better opportunities in other sectors. The last 2 years we've been hammered and dominated by pessimism and gloom in a commodity bear market. I admire many IO holders and positive contrairian posters here on HC who question 'mainstream' sediment from the usuals because bearish forecasts have been the flavour for the last 2 years which is now desperately overdone, extreme and exhausted. It's easy for analysts to follow each others bearish lead but I call out to analysts to actual seek the reversal now and have the balls to do so. My hat will come off to the first analyst which is willing to go against the norm and call a IO bottom and look at projected growth fundamentals. Like a seedling, upside is slowly growing, all it takes is the smallest good news to accelerate growth and the rising SPs of Australia's IO miners who are world leaders and exist on the lowest half of the cost curve.
Shorters and naysayers, the short curtain is slowly closing as exhausted negative sediment fades away so take your bow and leave the building please with respect to existing shareholders.
Urbanisation will continue as we consumers never have enough and simply want more. China is only 55% urbanised and India 36%. A long way to go for upside. Let's stop the negative rot plaguing the industry and protect and back our very own world leading IO industry.
DOYR
FMG Price at posting:
$1.95 Sentiment: Buy Disclosure: Held
(20min delay)