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Prices of iron ore hit a seven-month low today, and are down 30% since hitting a year high in...

Prices of iron ore hit a seven-month low today, and are down 30% since hitting a year high in February, as prices get hit by a demand slowdown in China and a glut of supply. Analysts are predicting more declines, with Westpac projecting iron ore prices to drop to as low as $85 a ton by the end of September. Liberum Capital notes that its channel checks show the price may fall below $90 a ton. "The market is flush with product at the moment," says RBS Morgans resources analyst James Wilson. "Pricing power has switched from the iron-ore miners to the steel mills."
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Comments (7)
  • SmashFinance
    , contributor
    Comments (34) | Send Message
     
    Only in this new age of central banking hocus pocus can the public be sold on a "global economic expansion" with demand for the basic building blocks of growth falling of a cliff...
    30 May 2013, 12:50 PM Reply Like
  • milehr
    , contributor
    Comments (519) | Send Message
     
    Do not know about "central banking", but agree that we have a stock market boom based on declining economy.
    30 May 2013, 07:09 PM Reply Like
  • TheJollyGreenMan
    , contributor
    Comments (89) | Send Message
     
    SmashF, so true. I remember the dot.com craze, the Time magazine headlines, and how the rules are going to re-written, and all that jazz. The crash came within a few months after that article.

     

    Gold and Iron ore is down. I am just going to sit this out. Its not only China that needs Iron; India, Malaysia, all these counties with big populations are just not on the radar.
    30 May 2013, 03:51 PM Reply Like
  • classmate43@yahoo.com
    , contributor
    Comment (1) | Send Message
     
    I bought GGB in Nov. 2010 at $12.22 and have held it, its a good strong company so am sure in due time they will be back with a roar! Makes no sense to take a hit when the company is so strong.
    30 May 2013, 08:06 PM Reply Like
  • King Rat
    , contributor
    Comments (805) | Send Message
     
    classmate43, welcome to SA. I am not in GGB but have invested in MT. fwiw one issue that affects GGB is their balance sheet and cash/debt ratios. They have been cutting back as much as they can but have still lost cash. Cash = short term debt which means they either have to reissue debt, issue shares, make a huge profit, or risk insolvency. Assuming they succeed in the short term, long term payouts will be huge. If I were going into GGB, I would be more comfortable with Jan. 5 calls. You lose 4% (24¢) in premiums but also the risk of any drop below $5.
    31 May 2013, 06:07 PM Reply Like
  • freed0m
    , contributor
    Comments (940) | Send Message
     
    Pricing power switch? Is he sure or not?

     

    The miners can cut their production, and there is only that much production which is low cost. What can the steel mills do? not producing?
    30 May 2013, 08:13 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3083) | Send Message
     
    Part of the demand slowdown in China is due to a change in leadership. Unfortunately the new leadership is not indicating a willingness to generate large infrastructure projects, which would drive demand for raw materials. I think this may change, but not in the near term. Overall I think it is a good buying opportunity, especially as VALE approaches the late 2008 and early 2009 lows.
    31 May 2013, 08:29 PM Reply Like
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