positive article re iron ore stock piles

Found this article on Miningnews.net worth a read

On the market, a large number of iron ore companies posted impressive share price rises at a time when the overall metals and mining index fell.

As that was happening Walsh, a normally conservative chap, said he had seen evidence of China’s great wall of stockpiled ore starting to shrink.

Whether we’re dealing with two totally unrelated events, or an iron ore version of “straw clutching” by a drowning man, remains to be seen over a period longer than 72-hours.

However, what happened on Friday is worth a close look because there is no doubt in Dryblower’s mind that the terrible six months through which we have passed since mid-year could end as quickly as it started.

The reason for this optimism is based on a simple observation of human nature. Just as no one saw the link six months ago between systemic bank failures in the United States and the wider world of commodities, now we are unable to see through the fog of the global financial crisis.

Complicating this already tricky situation are questions of whether we truly (as in hand on heart and no fingers crossed) believe in Chinese Government statistics, and whether we really understand the speed at which information and “hot money” flows influence commodity prices.

Enough of the waffle. Let’s see last week’s evidence which impressed Dryblower, starting with the stock market.

While most interest in iron ore companies was focused on the human headline, Andrew Forrest, and the company he runs, Fortescue Metals Group, there was more interesting action elsewhere.

FMG, stung by reports of a bitter and expensive legal battle over disputed shipping contracts, saw its share price slip backwards by around 10% over the week, including a drop of 8.5% on Friday alone.

Elsewhere, emerging iron ore miner Gindalbie Metals was rising by an eye-catching 52% over the week, including 22% on Friday, and Mt Gibson was up an even more impressive 68% for the week, with 10% coming on Friday.

Gindalbie and Mt Gibson were not alone on the plus side of the ledger. Atlas Iron was up a healthy 12% last week. Sundance was up 8%. Territory was up 17%, and even that other human headline, Nathan McMahon, was celebrating a 36% rise by the company he runs, Cazaly Resources not for some fresh legal battle but because of some solid iron ore exploration assay results.

There’s a pattern in those prices which sits very comfortably with Walsh’s comments that the most important measures of Chinese iron ore demand are showing signs of reversing a six month long slide.

Port stockpiles, the litmus test of what’s being consumed further upstream in the steel-making process, were reported by Walsh in an exclusive interview on MiningNews.net to have dropped to around 60 million tonnes, a number which he says is “below 30-day requirements”. Of real importance was his next comment: “That’s starting to get into the range of getting tight.”

Walsh, after playing a role on the Rio Tinto defence team in fighting off BHP Billiton’s takeover assault, has every reason to be looking for slivers of light on the horizon, if only to help with a company-wide effort to restore some of the shine to his company’s share price.

But, even if there is a degree of pre-Christmas wishful thinking on Walsh’s part, and no-one really knows that’s going on in the global financial system, there appears to be a gathering of evidence that dawn might soon break for the shell-shocked iron ore miners.

Hopefully, it will not be a false dawn and those port stockpiles really have shrunk, because if they have then we might really have something more than Christmas and the new year to celebrate over the next few weeks.