io pricing and viability

OK I'm trying to get an understanding of the IO pricing picture - as are many in the world right now.

Here is an article on Chinese steel demand.

http://ftalphaville.ft.com/blog/2012/08/30/1126061/the-ever-increasing-hunger-for-steel/

There have been various articles in the AFR this weekend. Nothing too encouraging there.

There is also a big increase in IO supply coming, with the majors all expanding massively. All those expansions really based on china needing 1B t pa by 2020. That target now looks slightly less likely.

I'm not really seeing much positive in the way of drivers for demand given the increasing global supply.

Given that pricing is normally down to supply and demand, not encouraging either.

Now this was always on the cards, question was timing. I wasn't expecting this to hit yet, perhaps in two years, but not now.

I was also mindful that long term pricing was always expecting to come down.

Question really is where will the pricing settle at? mbironoreindex.com is showing a marginal increase on Friday, first time seen one of them in a while.

I think we still have something that is viable if IO pricing returns to and remains over > US$100-110. If it remains lower than that then I'd expect the A$ to fall, which might give us some chance as well - but its holding stubbornly higher than expected, losing the usual natural hedge.

However even if that happens the whole exercise is very unsettling, which in turn will make it hard to raise capital either via debt or CR.

Best we can hope for is as quick rebound in IO pricing, such that the worries go away.

Next quarterly due end of Oct, and the AGM is usually early Nov. That timeframe will be key. What will the IO pricing be at that point, what plan do the company have? What costs do the company have?

Anyone got a ray of sunshine?