iron ore supply

I think someone mentioned in a previous post that the Chinese have been had over by the likes of BHP etc. This really isn't true. Yes they paid relatively high prices for Fe and Coking coal during the aggressive build out of the economy and when Fe pricing was fixed on a one year basis by Rio/BHP and Vale of S America. Yes it was pretty cartellish but they had what someone else wanted in abundance, of the right specification and on time.

Now that China is changing its economic model there will be a slow down of sorts in its consumption of Fe etc but remember it's not all for domestic consumption - they are also the largest exporter of steel products. Of note is the dominance of Australia and Brazil in the iron ore bulk trade - literally miles ahead of anyone. In a sense they have the pricing control in their hands and are also now producing at a historically low price.

The Chinese iron ore mining and steel industry is going through a very harsh consolidation which is necessary.Many small/marginal producers will close, pollution rules will also have an effect.It will be a better market in a year or so I believe.

The old Murchison Fe project which PDY is trying to reboot may have to wait in the ground for a while. Barnett was stuffed around by the previous incumbents so he won't take kindly to a repeat.

Fe may head further South and there is still a heap of projects filtering through in South Australia and of course not to forget Roy Hill and Gina Rinehart - another load of the stuff !!! Marginality is not the game so mid tier miners will struggle.

The link, although a bit old, is quite interesting.

http://www.issb.co.uk/global.html