Seeking Alpha

More Einhorn: A new bearish thesis, Greenlight has shorted a number of stocks in the iron ore...

More Einhorn: A new bearish thesis, Greenlight has shorted a number of stocks in the iron ore sector, believing the billions miners have spent growing capacity is coming online as global demand growth for steel fades. The big late-year rally in iron ore prices - and stocks like RIO, BHP, VALE, CLF, to name a few - looks to have made a good entry point.
Comments (3)
  • If you are the number one or two producer and at the bottom of the cost curve in a commodities market the one big hole that can upset your company is the outlook for the commodity in the medium (3 to 7 years) and long term (7 to 10 years plus). The outlook for iron ore, copper, oil and gas (and uranium), potash and metallurgical coal on these timelines is excellent. And BHP Billiton's main asset in each case is in a developed setting where the corruption associated with so much mining in the developing world is at a minimum. Apart from their oil and gas assets that are located to benefit from the USA's energy story their deposits are the healthiest known in each commodity. Seems to me there is a lot to like if you are interested in value or am I missing a big minus in the mix?
    23 Jan 2013, 03:59 PM Reply Like
  • Those who take a large short position obviously want others to join their position. We will see if China, Japan, and India use more or less steel in the future. Spot prices have been good, so there are two parties on every trade. Some large hedge funds are not always winners----check it out.
    23 Jan 2013, 04:03 PM Reply Like
  • The Chinese Iron ore inventories are already a full 30 percent below their levels from a year ago. They stabled out in December but have not risen. I do not see them going much below this. The demand for Chinese Steel is expected to grow at over 3 percent for the coming year. Not diminish as this article seems to indicate. I fully expect the iron prices to maintain or possibly raise slightly higher for the near future.
    24 Jan 2013, 05:56 AM Reply Like
DJIA (DIA) S&P 500 (SPY)