Replies to post #5482 on The Rising Influence of Rising Affluence

[dewophile]

The alloy metals I'm involved in are at winter 09' prices. They still can't move inventory

i'm not sure what you do but i don't think one can assume all metals/raw materials are created equal. aluminum is in a long term slump. thermal coal is getting replaced by nat gas. etc.
what is somewhat unique to iron ore is the supply side. the conventional thinking is that there are many marginal producers that will shut down when levels drop below a certain threshold. thus even if demand is tepid most think there is a floor of between 110-120 at least for the next 3 or so years. i liken this to oil - if prices were below a certain level certain producers would eventually go off line lke oil sands and other high cost producers

PS: the iron ore price floor is being tested as we speak

[OakesCS]

I agree completely with Dewophile's response. The lack of appreciation in your "alloy metals" prices may be due to over production related to their association with more profitable metals, e.g. gold. I can easily imagine this is the case for molybdenum and some other metals.

[DewDiligence]

If the condition of the iron-ore industry were as bad as jbog imagines, we would not be seeing takeover bids at a premium such as this one for Northern Iron:

http://blogs.wsj.com/dealjournalindia/2012/07/30/northern-iron-gets-competing-takeover-proposal

Northern Iron Ltd. said Monday it has received an initial takeover proposal from Swiss-based trading house Prominvest AG worth 525 million Australian dollars ($550 million), which is higher than an earlier A$518 million cash bid from India’s Aditya Birla Group… Aditya Birla sweetened its offer to A$1.40 a share earlier this month, prompting Northern Iron to agree to open its books to the Indian group.

…Northern Iron is currently producing around 2.1 million metric tons a year, but aims to reach its 2.8 million-tons-a-year nameplate capacity soon, and double concentrate production to 5.6 million tons annually by 2016 at a cost of up to $360 million.