I have enormous respect for someone in a top position within the steel industry. This is what I call a unique insight.
After my studies, for 8 years I worked in the shipping industry as a trade manager. Therefore, my experience is in the movement of cargoes around the world, and the crucial role that shipping plays in keep the global economy afloat (pardon the pun).
The only things that I would add to your post, is that with a worldwide infrastructure boom likely to last until at least the end of this decade, I can’t see the price of IO going much under 130 USD. Of course this could all change, if for some reason, the COVID-19 crisis got significantly worse than it is now, which IMVHO, is unlikely to happen, given the current successful global roll-out of the various vaccines, which should mean that at least 70% of the world’s population will be vaccinated by 2022.
The other thing that I am unsure of is, how much disruption to the supply chain there currently is, and how much there will be in the future. Even Vale, who operate out of Brazil, which is currently in dire straits due to COVID-19, are still managing to supply significant amounts of IO to the world steel market, which surprises me. Having said this, it is not entirely out of the question, that if the situation in Brazil got significantly worse than it is now, that Vale could eventually be unable to supply much IO at all, due to the fact that a lot of the essential workers that are involved in the mining and export of Vale’s IO, have become either very sick or have died. This would be a terrible thing and a real humanitarian catastrophe, which would definitely bring with it a very serious supply chain disruption. Under such a scenario, we could possibly see the IO price head towards 200 USD. Having said this, I believe that this scenario is unlikely IMHO.
Cheers.
FMG Price at posting:
$20.15 Sentiment: Buy Disclosure: Held
(20min delay)