Iron ore dropping
- Thread starter blackenator
- Start date
iron ore price at six year lows.
http://www.theaustralian.com.au/business/mining-energy/iron-ore-price-hits-a-new-six-year-low/story-e6frg9df-1227267276923
Trading around $58 now. With the strengthening USD and China slowdown, commodities are just going lower and lower.
http://www.theaustralian.com.au/business/mining-energy/iron-ore-price-hits-a-new-six-year-low/story-e6frg9df-1227267276923
Trading around $58 now. With the strengthening USD and China slowdown, commodities are just going lower and lower.
All commodities will continue to be hit as long as talk of US Fed rates continues.
Takeovers on the horizon?
Well, think about it.
The "best" assets around will be either bought on the scrap heap or taken over. Preferably the former, if you are a RIO or BHP holder, no?
Cuthroat stuff ATM.
The 2 biggest miners on the globe will survive Im sure.
Same game being played in the oil markets by OPEC in particular Saudi Arabia. They are refusing to cut production even when supply is higher than demand forcing prices to fall. This will eventually force the US Shale oil producers to close shop as it's uneconomical. Saudi Arabia will survive even at $20 / barrel but others will not.
Let's see how the end game play out.
Cheers,
Oracle.
cost of current production in Saudi Arabia is $34US/bbl, I thought?
Not sure what their true production costs are Aaron. But me thinks they will be able to produce oil at loss to wipe out their competition. They are one of the lowest cost producers out there. So everyone else will go bust before they go bust.
Cheers,
Oracle.
There is a reason why the juniors can not match the cost of production at the majors. Not all of it is due to economies of scale, but due to the quality of the assets.
The only reasons juniors exist is because the price of iron ore ramped up so high, that they started developing assets/orebodies that would never survive the downturn due to high strip ratios/poor quality ore/poor product/high processing costs.
only two remaining shares exposed to iron ore
(unless one wants to consider indirect effect through government royalty)
NHW: its such a small position now, doesn't matter.
MCS: still holding, a larger position.
On the side lines.
(unless one wants to consider indirect effect through government royalty)
NHW: its such a small position now, doesn't matter.
MCS: still holding, a larger position.
On the side lines.
I wouldn't have thought it would be that high - but depends on the measurement used.
Total production costs in CIS (soviet countries) is about $15-$20/barrel for onshore.
I think Saudis produce for about half that - but I don't know what is included.
Oil sands are about $50-70/barrel and offshore production has a wide range of about $30-100+.
Its hard to measure as every country/company includes/excludes different costs.
Eg - we can produce for about $3.50 but then it costs us about $10-15 to transport.
Some countries/companies exclude some of the royalties/taxes they need to pay, or transport costs etc
Blacky
*note - this is all off the top of my head - so may not be accurate, and I haven't googled it to confirm.
thanks Blacky.
you are right - it IS lower. this was the cost to get Saudi oil onshore in the US for their stockpile.
it was Saudi oil, just had nothing to do with production - or even being in the kingdom...oops
you are right - it IS lower. this was the cost to get Saudi oil onshore in the US for their stockpile.
it was Saudi oil, just had nothing to do with production - or even being in the kingdom...oops
Andrew forrest annouced today that he would like all iron ore mining companies to put a cap on production. He was calling out to the big ones - RIO, BHP, and the large iron ore company in brazil too. Hoping to get the iron ore price back up to the 70-90 mark.
Im working up on the FMG sites and its pretty obvious they are going through some real tough times. Twiggy has been up to site himself twice in the last couple of months
Ive been up here for 3 years and never seen him come up before.
Im working up on the FMG sites and its pretty obvious they are going through some real tough times. Twiggy has been up to site himself twice in the last couple of months
Ive been up here for 3 years and never seen him come up before.
And he's now being investigated by the ACCC for price fixing.
They were paying out large dividends in the good times and Twiggy is a big shareholder....
Just like Americans who thought their property prices could never fall as low as it did, the same way most junior iron ore minors thought the price would never go down as low and stay there long enough.
Some of us Australian property investors think that our property can never fall 30%-40%-50% but unfortunately you can never rule out something like that from happening no matter how less the likely hood. Just look at above scenarios (Also in case of oil, gold miners - look how much they have fallen from their peaks) and you can see things that looked highly unlikely do happen. And when there is large amounts of debt it increases the chances even more.
Cheers,
Oracle.
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