Iron ore price, page-646

Market doesn‘t like uncertainties, 91.7% to 76% is a big drop. It‘s like IO price goes from US$94 to US$67, and we got both with FMG, I don‘t think the 7% drop in SP yesterday was due to IO price, I believe a very large portion if not ALL was due to lower tonnage and lower realised price.

Before yesterday, I had FMG at FY NPAT of US$2.8B or PE of 5 at $6 and PE of 6 at $7.2. For FMG, I think Market had PE of 5-6 in mind.

After yesterday, I had FMG at FY NPAT of US$2.3B or if PE of 5 to 6, SP between $5 to $6. I think this where FMG would be at between now and Q4 report, if IO stays above US$60.

That is just my view ATM, so I‘ve changed my sentiment to hold, if there are positive news like Twiggy buying shares, or IO inventory drop to 90MT. I will change my view again.

Twiggy bought shares at $5.25 and Penny at $5.74. I think a lot of support will be at $5.25 if not already at $5.50.

Tangshan Spot price so far: Hot roll, sheet, tube all up. Heavy scrap and Chinese IO down today.

Steel Rebar Market: 16 up, 32 unchnanged and 6 down.

Billet Market: 12 up and 10 unchanged. Rise of 20-30 yuan.

Physical market transactions improved since yesterday, I think should continue over the weekend.

Again premiums of Australian IO continue to decrease, my source said off 20 yuan at Qingdao port today, which incl. FMG IOs.

With regarding to IO inventory, Data is released every Friday, last week we had decrease of 0.82MT from the week before with over 50% were low grade IOs. I‘ll post this week once I have to data.

DYOR.

Frank.