Will FMG be taken oven?, page-6

Hi gassin,
I'm not sure how you are able to excuse FMG from the overproduction 'crew', you blame BHP RIO & Vale, but FMG are in the same game, playing by the same rules.

As for the GST, there are significant hurdles to be jumped before any Govt can increase it from 10%, so not sure that we should panic on that front just yet.

I do agree that it is senseless to flood the IO market with cheap ore, which is to China's benefit and our disadvantage, but that unfortunately is capitalism at work and the Chinese are excellent players of the 'one against the other' game, too. Plus they get to release whatever figures they need to keep the price where it suits them best. I'm fairly confident that they won't want to be dealing with just a few 'big boys' in the IO market, so its in their interest to get the balance just right, cheapest possible IO prices, with maximum number of competing suppliers.

At this stage, the only thing I can think of that might check the expansion/oversupply is a bad summer cyclone season slowing down port output. I have wondered if FMG's higher production numbers last month might have been in anticipation of a slower period in Jan/Feb if cyclones become an issue.

This is the forecast for WA's north Jan 2015;
"The northwestern sub-region, where tropical cyclones can impact coastal Western Australian communities, has a below average outlook for tropical cyclones this season (38% of above average, meaning a 62% chance of below average). Typically, five cyclones form or pass through this area each season. Around 40% of tropical cyclones in the northwestern sub-region impact on the coast at some stage in their life cycle. Forecast accuracy in this region is good." http://www.bom.gov.au/climate/ahead/tc.shtml

Flip