M56Don't think anyone is going anywhere in Nov. "Prove he has a...

M56
Don't think anyone is going anywhere in Nov. "Prove he has a product that people want to buy" is the real concern I believe. The peak of IO price has past, if BRM's IO stays at current level of impurities, we have to ask what will be the cost and sale price. I think ( I said b4) BRM's IO price will be at a discount unless impurities level are much improved.
I believe BRM will get rail access, the quession is which one and how much it will cost(freight & capex). This should go into the above mentioed cost again. So far it seems BRM has 2 options on rail and people can work out some figures on the cost(include beneficiation). So it all comes down to: will anyone take the IO with current impurities level and pay what price.
The good part is BRM has fund and there are at least 12 mnths btw now and production, so time is on BRM's side. Those new producers with low output and high capex may find themselves in very dificult situation with low demand, low price and tight credit market. They may not survive the next 12 months.
The steel market in China is very tough at the moment, and I believe that they will use this oppertunity to rationalize the sector so many small steel mills will not survive, and this is the perfect chance for them to force down the IO price. The dramatic increase of raw material cost has put many of the mills into loss making production for almost 12 mnths, now steel demand has gone as well. The Chinese government has been introducing new stimulating polices since Sunday these include tax rebate for exporters , but steel export is not included in the tax rebate. So the short term IO market is not looking good.
And also irrespective of the short term fluctuation in the production , China steel production should reach 500mt output and that roughly needs 800mt of IO and 40% of them are imported which is 80mt a quarter, currently there are still 70mt IO on the port which is about 3 months supply under the current production.
Some positive news is that Chinese government’s new policies do include encouraging people to buy house for owner occupying and will spend more on building affordable housing for low income people. Plus they will start the rebuilding programme earlier for the earthquake affected area and may also decide to roll out a new railway system. China has 50000 – 70000 Km railway compare to US with 250,000 Km. More steel is needed. And today on Chinese market, some of the steel products went up nearly $60 from the recent bottom.
So I will pay close attention to the long awaited test work result for the final IO.

Cheers