monday fizzle, page-20

There is an interesting split developing between base metal moves and iron ore price moves.

"Margins available on iron ore, even after taking account of expected price falls, would be higher than most other commodities in their (ie, BHP, RIO and FMG) portfolios. - exceptions would be petroleum, copper and possibly bauxite..,"

"Therefore, when the companies are comparing project returns internally, iron ore expansion is an easy decision to approve relative to other commodities including aluminum, lead or zinc." From 'Deal Journal Australia'.

Today the LME complex is weaker, but Fe and $A are up. A strong $A usually carries the day, despite it actually reducing returns. That's an oddity not in text books, but nevertheless it is almost always a strong indicator. Market seldom rises when the dollar is in downtrend. The January strength in the market almost mirrors the dollar rise.

Latest Fe spot price;