iron ore news, page-15

The naysayers don't seem to make much sense

World steel production is approximately 130mt per month or 1.5Bt per annum

This requires about 2.5Bt of 62% Fe ore, or even more low grade Chinese ore

At low 3% annual growth (has been 7-10% this decade) this requires at least another 75mt per year extra 62% Fe ore. Over say the next three years that's 225mt.

At higher growth rate which are more likely given the low steel intensity in the developing world even more is required.

Brazil has failed to increase production over the last few years. India is exporting less and may start importing. Africa is a disaster for investors and is unlikely to meet this demand.

The chances that Australia can keep up the pace pumping out an extra 75mt every year for the next decade or more is unlikely. If the demand is higher than this, which is highly likely given the history of the last decade, the market will be tight.

In summary, the GS analysts dont know what their talking about or are using their influence to get a significant Commodity exposure cheaply. They claim that 100mt is coming on stream this year but I would believe that when I see it. That's a big increase to achieve and even if it happens, it may only meet the 3% increase in demand and the drop in Indian production.

As we are told ad nauseum, the mining investment boom is winding down now and will leave a big gap if the Fe ore price doesn't stay high to stimulate more expansion in supply