Select to expand quotewarwickl said..
Obvious
obvious to you , so elaborate for me please , or butt out .
well, usually you can be sure the price has dropped because supply has risen above demand.
so the world is using 1/2 the amount of of steel that it was five years ago ? china must have finished their project ?
Select to expand quoteSandS said..
so the world is using 1/2 the amount of of steel that it was five years ago ? china must have finished their project ?
No, more producers are producing, so, they undercut to get sales and overall price goes down
I don't fully understand but I heard something to do with manipulations by the big companys (BHP, RIO) to drive out the smaller producers as they can't survive when the price falls this low.
so does that mean the people working the mines get paid half of what they did five years ago . or they are working half the time ,or half the people are working in the industry or the principle contractor is accepting half the money he asked five years ago, for the raw material ?
so if the last scenario is the case when does it become not viable to dig up and sell iron ore ?
No, same amount of workers, digging same amount of IO, getting paid the same, but selling for half the price.
Means half the profit, and for smaller companies = losing money, which then makes them start laying off workers (currently happening) and going broke. There is no possible way they can run at a profit. They just try to minimise their losses.
Due to BHP and RIO's size and diversity, they can still run at a profit (just).. hence over time they stay in business, knock out the little guys and dominate the market in years to come. Cruel world 
Over supply. It only take a little over supply to effect prices in a big way.
BHP producing record amounts
RIO producing record amounts
FMG producing record amounts
Vale producing record amounts.
Mount Gibson was producing good amounts, but then they decided to divest into swimming pools.
China's growth is remaining kinda steady at ~7% give or take.
Select to expand quoteSandS said..
so does that mean the people working the mines get paid half of what they did five years ago . or they are working half the time ,or half the people are working in the industry or the principle contractor is accepting half the money he asked five years ago, for the raw material ?
so if the last scenario is the case when does it become not viable to dig up and sell iron ore ?
For the big guys, BHP, RIO and somewhat Vale they are aparently still making bank. Cost of production is still making in excess of $10 a tonne.
FMG, lower quality ore, i think 58% FE, so they get less per tonne. I think they are loosing a couple of bucks a tonne. Dont quote me on any of this.
People like Atlas will struggle. MGX will struggle now their high grade ore is now Koolan Island is under water, lucky MGX have $$.
Gindalbie Metals...dont go there...
look at the 10yr graph, not a radical drop in price, more like the end of a quick spike & resumption of 'normal' price.
When production ramps down at a mine jobs are deffinitley lost. Sometimes big cuts hundreds at a time. The mine I was recently at just made about 50 redundant. Machines are parked up untill its profitable.
Sands,
I've predicted this for a few years now on SB to the usual tune of laughs and heckles from you people.
I knew it was going to happen - just a matter of time, but the big black cloud has arrived.
We are on the cusp of the MOTHER of all RECESSIONS.
Tonight.... kiss your wife, mother, girlfriends and children - tell them that you love them. Withdraw your life savings from the bank. Start building that bunker in your backyard that you've been planning. Begin preparations for the challenging years ahead.
All the signs have been there for years, for those of us that bothered to take a good hard look at our surroundings.
Retail strips filled with for sale signs being replaced, with upstart four eyed baristas - sporting Ned Kelly beards who only have a three month TAFE degree to their name - opening hipster cafes in their place. Blodkbuster and Video-Ezy stores closing everywhere - heaps of signs everywhere. And this is just the start of many more closures to come.
Life is not going to be the same again - good luck SB comrades.
Let's not forget the change of the pricing mechanism in the mid-naughties... Then the big run on the spot price...
Resources are cyclical... Buckle your seatbelts and enjoy the ride
Select to expand quoteSandS said..
Why has the price of iron-ore halved since 2009.
It's all just supply and demand, and the same thing happens in every unregulated market.
If there's money in it, then everybody gets into it, be it sheep, cattle, kiwifruit, wheat, coal,. oil,.. nickel,.. and iron ore.
When supply equaled demand, the price just went up with costs and inflation. This sets the long term underlying gradient.
When supply falls short of demand, in this case because of the recent demands from china, then the price goes up disproportionately to costs and inflation.
This was the big spike in prices we had in the previous decade. It was not the long term gradient.
This makes for big profits for a short period.
Big profits always draw in lots more providers.
As the new providers start production, the point is soon reached where supply exceeds demand, and the buyers can then bargain on the price.
Over the last few years, the new iron ore and coal projects have been coming on line and production is rapidly rising.
Having spent all that money on setting up production, the producers then race each other to the bottom on price, just to stay in business.
That's where we are now.
Producers who borrowed lots of money to start up or increase production will now be in the excrement because the banks still want the interest on borrowings.
Producers can only do this while they get more for the product than it costs to produce.
High cost producers will either need to cease production until prices improve, or if they don't have that option, they go broke.
Long term producers who have little or no borrowing can reduce costs to a minimum and plug on, operating on a reduced costs basis.
This is by reducing or stopping exploration and development and whatever other expenses which can be reduced while keeping production running.
This means that eventually, future demand will exceed production and then prices will again go up.
How long this takes will depend on how many producers go broke and reduce supply, and long it takes for new markets to be established and drive up demand for the product.
Select to expand quoteoliver said..
Sands,
I've predicted this for a few years now on SB to the usual tune of laughs and heckles from you people.
I knew it was going to happen - just a matter of time, but the big black cloud has arrived.
We are on the cusp of the MOTHER of all RECESSIONS.
Tonight.... kiss your wife, mother, girlfriends and children - tell them that you love them. Withdraw your life savings from the bank. Start building that bunker in your backyard that you've been planning. Begin preparations for the challenging years ahead.
All the signs have been there for years, for those of us that bothered to take a good hard look at our surroundings.
Retail strips filled with for sale signs being replaced, with upstart four eyed baristas - sporting Ned Kelly beards who only have a three month TAFE degree to their name - opening hipster cafes in their place. Blodkbuster and Video-Ezy stores closing everywhere - heaps of signs everywhere. And this is just the start of many more closures to come.
Life is not going to be the same again - good luck SB comrades.
well when it gets to 17.5% interest rates i would start to worry…been there done that.
also remember BIG business in the late 90s preaching the same thing when japan crashed….and still waiting
but you maybe right,,,,,,,,i tossed my foggy crystal ball in the bin when i owned my home.
oliver / adolf / whoever you are
Doesn't worry me, I took heed of your earlier warnings and sought advice from PM33. Consequently I hedged everything I have into silver.
Lucky for me I got in just in time, just as iron ore was starting to dip in mid 2011 I put everything into silver.
Unfortunately it seems silver has dropped by more than iron ore.
But I am not nervous, I am holding firm. Like you say the end is nigh and when it comes everyone will want food -no, fuel -no, security -no,...... they will want my silver.
The rest of you'se are just suckers.
