MIN 13.9% $49.14 mineral resources limited

undamental demand and supply still matter, and there are two...

  1. 13,783 Posts.
    undamental demand and supply still matter, and there are two factors in China that are worth noting.

    First, the plan by BHP, Rio Tinto and Vale to drive the small, high-cost Chinese producers out of the market by flooding it with iron ore, while drastically cutting costs and pushing the price down (and at the same time crashing Australia’s national income, but that’s another story) is finally starting to work.

    In 2015, Chinese iron ore production fell 130 million tonnes and the industry is now operating at 45 per cent of capacity. The mines that are closing are small and usually underground operations rather than open cut, and are unlikely ever to reopen.

    Second, President Xi Jinping’s $US1 trillion “One Belt, One Road” project, for which the Asian Infrastructure Investment Bank was created, is designed, in part, to provide work for China’s steel industry, especially the land-based “Silk Road Economic Belt”.

    Up to now, the Chinese steel industry has been sustained by dumping its product into western markets, helping to drive other domestic steel industries out of business and to cut consumer price inflation, thus helping to send central bankers towards their wits end (and negative interest rates).

    Over the next few years, China’s massive Asian infrastructure drive will likely produce a big new source of demand for steel and therefore iron ore.

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    MIN will be ok ...as IO price is moving Up and Lithium price is Moving Up = MIN will go Up.
 
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