The IO sales on the spot market in the past few months have been from trading firms who buy cargos from producers (eg. Vale) using debt from a bank or investors looking for a fixed income. The traders onsell the cargos to steel mills, or hold onto the io as inventory at port looking for a higher price for their traded goods (while paying interest to the banks or investors). So traders need to find a balance between holding inventory versus interest and business expenses. If they can't make interest payments or investors/banks become fiesty then they will order the trader to sell the inventory to recover their loans... this is a distressed sale, if the sale occurs during a destocking phase for the purchaser (ie steel mill), then you have the situation in the spot market we recently had.
We can wipe it off as just an irrational moment in the markets because, believe it or not, io sold at spot went as low as $86/t, on the same day steel mills were sourcing io from local mines at $110+/t... although the floor was breached on the spot market (which I think represents about 10% of the seaborne market, and about 2%? of global production), the floor remained intact in every other pricing point of the market.
The media is an agent that misrepresents facts to sell a story. The mining boom dead? pffft RIO up another 2% in the US tonight, base metals at 2012 highs...The non-existent USA recession? or have a look at MAH and the behind the scenes activity of journos. And as I found out today the difference between these two websites... one is selling you a myth and sponsored by Fairfax. http://www.melbournepollen.com.au/ http://www.weatherzone.com.au/pollen-index/vic/melbourne/melbourne
AGO Price at posting:
$1.43 Sentiment: Buy Disclosure: Held
