Iron ore stocks had a bad year in 2014 with blood all over the street, lost over 85% value for most iron ore stocks. During GFC, we also witnessed similar value diminishing within few months, BUT recovered strongly from January 2009 when spot price hit new low at that time of US58/t, world seemed doomed, also AUD was hitting low 60c, doomsayers all over the media just similar as what happened now. When blood is all over the street, it's time to buy!
FA, we all knew big four iron ore companies lift their production approx 100Mt. But high cost miners closure got less mentioned. I found few sources stated closed high cost production would be around 200Mt. According to a chinese research report, most of chinese production cost are over US$80/t, equivalent A$99/t. Also noted most of chinese iron ores are low grade. The report suggested China would need to import over 90% of its iron ore demand of over 800Mt p.a. The demand is expected to increased by 35Mt for 2015 calendar year.
India was one of the exploring iron ore countries, now becomes importing one.
Depressed spot price have already forced over 75% miners closed production. India would import 45Mt over next 3 years.
When price dropped below production cost, it will not sustain for long, especially China needs import 90% of its iron ore demand.
I view media and instos calls as opposite to identify but opportinities. They said AUssie dollar would drop to 50c during GFC, predicted Aussie dollar to sustain over 1.05 USD for 2015 not long ago... Now they said iron ore is going to hit US60/t, it might, but won't sustain, will bounce over US$80, imo.
I believe, iron ore stocks will have an exceptional year as they had a bloodbath 2014.
More than three-quarters of India’s iron ore mines are lying idle, according to a parliament reply by junior mines minister Vishnu Deo Sai on Dec. 1. Of 776 mines in all, 590 are closed, Sai told lawmakers. All of the 330 mines in Goa are shut, while 112 mines in Odisha out of a total 143 are not operating, he said.
Mine closures have led to record shortages of iron ore and will probably turn India into a net importer of the material in the year to March 31. Indian steelmakers are set to buy as much as 15 million tons from overseas this fiscal year, almost triple the quantity imported a year earlier.
India may need to import as much as 45 million tons in the next three years, should mining curbs be maintained and demand from steel producers continues to rise, Zhuo Zhang and Kenneth Hoffman, analysts at Bloomberg Intelligence, said in a Nov. 20 report.
BCI Price at posting:
53.0¢ Sentiment: None Disclosure: Not Held
FMG Price at posting:
$2.74 Sentiment: None Disclosure: Not Held
MGX Price at posting:
24.5¢ Sentiment: None Disclosure: Not Held
ARI Price at posting:
21.5¢ Sentiment: None Disclosure: Not Held
AGO Price at posting:
16.5¢ Sentiment: None Disclosure: Held
