It hurts to say but this Q report probably the "worst" in turns of expectations. Totally missed the mark on "tonnage" and "realised price", or in dollar terms, some US$500M for 3 moths.
FMG as a company still bringing in US$1340M cash flow for the last 3 months, the FY profit will need to be adjust now, and while IO price is falling, just makes investors loosing confidence, and the market definitely punish the SP today.
And the fact that FMG only looking at "startup" projects ATM to save some $$$, I thought carry a bit of debt and acquire "advanced" project probably the better way and I think market also wants that.
For the first time in over 12 months, SP has dropped below MA200. Bear in control now.
I said it yesterday that Steel mills are "cheating" in using a lot more low grade IOs, and I read an article this morning at 9:42am which confirm it. From 7th of April, the "air pollutant" has increased around Beijing area, and Tangshan Steel mills are the worst of the industry that pollute the area. On the 8th of April, saw an increased of 38% from the day earlier, and some larger steel mills increased over 60%. From 8th to 11th of April, 946 companies were tested and 72% of them failed. There will be more news to come regarding this.
I think IO / SR Future is reacting to this and shows some support this morning, unfortunately it's still in a deep bear market, so we need policy to say "crackdown" is happening before it turns. On the futures trading floor, brokers still have "bearish" view on SR and IO this morning.
With Steel spot prices this morning, more downward pressure, prices are still falling, I only get a summary of all prices from all markets late in the afternoon, but with the "real time" SMS I get, most prices are still down ATM.
That's it, probably the most "bearish" post I've done for a while, but this is what information I have. LT wise, we need 4th Q to come out better than "76%", until then, we are in the mercy of IO price.
DYOR.
Frank.
Expand
(20min delay)