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Wildebeest  

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  • The General And The Particular [View article]
    You are claiming these companies will drop 50% -- are you back peddling from that claim?
    Apr 16, 2012. 06:53 PM | Likes Like |Link to Comment
  • The General And The Particular [View article]
    you use customs data yourself but when you get called out for deliberately misrepresenting it you claim it is in the past!
    Apr 16, 2012. 06:27 PM | 1 Like Like |Link to Comment
  • The General And The Particular [View article]
    earlyretirement,

    first point is that it is santos that asserts new entrants just appear when high margins are sustained over a period. I have asked him where these new suppliers are given we have had high margins for 5 years. He cannot identify them.

    If you look at the company reports of Vale, BHP, Rio and FMG they identify large capex for substantial expansion of volumes coming online but the timelines are for 2015. IMO that is optimistic but nevertheless lets stick with that.

    There are scores of small projects around the world. Many are magnetite but thats ok. But the point about that is that 1-5MTpa projects etc., even cumulatively, are not adding a lot to global supply.

    santos references to increases in chinese production show the ignorance in many of his arguments on this topic. chinese iron ore is high cost. In fact the reason that you will find many analysts putting a price flaw on iron ore is because of china being the high cost marginal producer. So on one hand santos sees a price collapse yet on the other hand he talks about increased chinese supply -- which has a cash cost way above his collapsed prices. Because he hasn't got a clue about iron ore mining his argument is internally inconsistent.
    Apr 16, 2012. 06:24 PM | Likes Like |Link to Comment
  • The General And The Particular [View article]
    "What does it matter if it is poorer quality and higher cost, if there's more of it and it displaces other iron ore in making steel"

    this is just funny on so many levels.

    do you know the difference between magnetite and hematite? No.

    do you know that a furnace made for a feed of hematite won't switch to magnetite etc.? No

    do you know about the concept of the marginal producer? No

    ...you really should stop because you are just digging the hole further (maybe you'll find iron down there)
    Apr 16, 2012. 06:15 PM | Likes Like |Link to Comment
  • The General And The Particular [View article]
    Mark Anthony,

    the key to being an analyst is to take data and view it objectively. Unfortunately Mr Santos seems to form opinions then go looking for confirming data -- and even then he gets it wrong. The example of that is this article. Iron ore imports were up. There is no way anyone should be using an INCREASE in iron ore imports to support claims that investment slowdown is occurring.

    China may well slow down or collapse. In fact we know it will slow down because it is a command economy and the commanders have commanded a slowdown to 7% growth. The challenge for them will be to control the slowdown. However the point is that whatever theories people have about things, they need to support them with data. Mr Santos offers a few tid bits now and then, misreads/misrepresents other stuff -- like this import data, and ignores anything that doesn't fit his narrative.

    I read the stuff on coal but it is not a market I know well -- although I know a bit about coking coal for steel. But it was nice to read your point of view and challenge him on his data and opinions.
    Apr 16, 2012. 03:37 AM | 1 Like Like |Link to Comment
  • On Coal, Not All That Can Be Counted, Counts [View article]
    "I provide insights"

    stand up comedy
    Apr 16, 2012. 12:54 AM | 2 Likes Like |Link to Comment
  • Little Reason For Optimism On Coal [View article]
    great comment stream challenging this "author"
    Apr 16, 2012. 12:53 AM | 2 Likes Like |Link to Comment
  • The China Dichotomy [View article]
    "the most obvious victims of this transition continue to be the iron ore suppliers"

    One of these days you'll actually base this stuff on data rather than fantasy. Iron ore prices are 3 times cash cost -- I'm sure miners would be happy to "continue to be" "obvious victims" on that basis.
    Apr 16, 2012. 12:49 AM | 1 Like Like |Link to Comment
  • The General And The Particular [View article]
    The proper comparison with iron ore is not refineries it is oil wells -- i.e. the extraction of the resource from the ground. If you wanted a comparison to refineries it would be steel production.

    It is unfortunate you cannot distinguish between extraction and refining. :)
    Apr 15, 2012. 10:44 PM | Likes Like |Link to Comment
  • The General And The Particular [View article]
    more hand waving but at least you now accept that it takes a long time to get a project from being an idea to becoming a producing mine. So I suppose I have at least taught you that, so hopefully that will help you understand the supply response going forward.
    Apr 15, 2012. 08:41 PM | Likes Like |Link to Comment
  • The General And The Particular [View article]
    "The volume (or even value) of iron ore imports NOW is irrelevant for what I'm saying here."

    So why did you specifically mention iron ore in the context of a slowdown now?

    Stop trying to weasel out of this. Regardless of whether China is heading or a slowdown or not, the recent iron ore import data lends no support to that theory yet you cited it.
    Apr 15, 2012. 08:38 PM | 1 Like Like |Link to Comment
  • The General And The Particular [View article]
    Perhaps the best way to illustrate your faulty thinking and the narrative you are locked into is this:

    If a rise in imports of iron ore by China confirmed a slowdown, is there any level of imports that could have rejected your theory?

    It is all very well to have a theory about something but it must be falsifiable. If rising iron ore imports *confirm* a slowdown what level of imports would have rejected a slowdown? :)

    Just to be clear I am not debating whether or not China WILL slowdown, I am pointing out that you seem to want to make any data fit your theory.
    Apr 15, 2012. 07:23 PM | Likes Like |Link to Comment
  • The General And The Particular [View article]
    what all this boils down to is you are making assertions without supporting data -- and in fact the data contradicts your assertions.

    What triggered this exchange is that you claimed the recent iron ore import data supported your slowdown thesis. China may or may not slowdown, but the FACT is that China imports of iron ore increased which hardly supports a slowdown -- this was an explicit claim. In other words data doesn't support your thesis. You have a tendency to be loose with facts so as to present your narrative.

    So that is the demand side. On the supply side you talk about high margins in iron ore meaning new supply will come online but you make those statements without any understanding of what it takes to get a large (= significant contributor to global supply) project going. Here the data shows that after 5 years of high margins the majors continue to enjoy high margins -- prices are 3 times cash cost. This must be a puzzle for those like you who think a supply response must be quite quick. The data rejects those sort of fantasies because we've had 5 years to test them. Eventually, as I have repeatedly stated there will be some major supply added but you will be unable to explain why it has taken so long and why it didn't come from a new entrant long before.

    In the future just try and be prepared to be honest about data that contradicts your narrative. You might find it liberating.
    Apr 15, 2012. 07:16 PM | 1 Like Like |Link to Comment
  • The General And The Particular [View article]
    you have both failed to address that high margins have been there for 5 years yet Santos has explicitly stated that extra capacity gets added to reduce margins. Based on the data we already have, without even the predictions going forward, you are wrong. It hasn't happened -- and the reason it hasn't happened is because you don't understand mining and time and money.

    If you want to use some open ended timeline, sure, EVENTUALLY there will be a lot of extra supply -- but then I have said that as well. The difference is that I have said that the extra capacity -- the significant volumes -- are coming from majors not new entrants and are not coming for 3 years.

    As for chinese joint venture projects around the world, there are many, could name many, but Early Retirement seems unaware that the total volume of all these projects is a small fraction of global volumes. The BIG volumes being developed are from the majors. This contradicts your fantasy in which new players just come in and add supply and reduce margins.

    You haven't provided anything here to explain why there hasn't been new entrants challenging the majors already, why new supply hasn't been depressing margins already. You just make assertions, the sort an armchair economist would make about "frictionless" markets.

    As for China itself, even raising that shows the internal inconsistency in your thinking. Do you know what the cash cost of chinese iron ore is? Apparently not otherwise you could not cite this as the new production at the same time as predicting prices to fall below this cash cost.
    Apr 15, 2012. 06:07 PM | Likes Like |Link to Comment
  • The General And The Particular [View article]
    "You can choose to believe otherwise, but that will only make you surprised regarding the outcome."

    really love your straw man arguments. Is that really the best you can do. Hilarious.

    I have stated explicitly that it is coming online -- unlike you though I know it is coming online from the majors and the majority of it will not be before 2015. The fact that you mention volume from China shows how little you understand this market. Do you even know what the cash costs/grades of iron ore of these Chinese projects is?

    Over the next 3 years it is you that will be surprised because that will make it 8 years of huge margins whereas your simpleton model says that cannot happen, that new entrants will add supply immediately high margins exists. So where are the new entrants? FMG has been the only new entrant and planning for that company actually began a decade ago. All other new projects are trivial in terms of what they add to cumulative global volumes. According to your flawed understanding this would be impossible.
    Apr 15, 2012. 02:36 AM | 1 Like Like |Link to Comment
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