Fortescue Metals Group caused a stir recently by announcing it...

Fortescue Metals Group caused a stir recently by announcing it had done a deal with a Chinese shipbuilder for four 260,000dwt very large ore carriers (VLOCs). Weeks later the Australian company informed the market it was in advanced talks with another Chinese shipbuilder for a further four giants.

The first will be delivered in November 2016, through to 2017. Financed from cash flow on delivery. ($275m)

What is interesting is that as the survivors cut their costs to the bone, the stage is set for massive profits in the next upcycle, - which will not be forecast until it is well underway. A friend recently visited the Pilbara and reported that his 180 seat plane had 44 people on board. The same trip last year it was hard to get a seat. Autonomous trucks, remote equipment controls etc have been fast-tracked, for massive future benefit.

When the dire present forecasts hit the front pages, the next upcycle may already be starting. Anyone under 30 has only seen one cycle, consequently they logically think the world is ending.

Anyone can manage in good times, but the downcycle soon sorts them out. Can't wait for the next upswing which will be a beauty.

On the subject of takeover, only a fool would rule it out, but the obvious predator, Glencore, has its own issues, and I think it is unlikely. But deep down I do feel that once Andrew Forrest has proved his case, he may well be happy to see a takeover. But not yet.