Iron ore prices getting thrashed

What has also been happening is that iron ore prices have been thrashed, down 15 percent for the month of August. And now they are below 90 Dollars a ton. At that level the squeeze is now on. The Chinese iron ore industry, as low grade as it is, is unprofitable below 120 Dollars a ton. Guess what they are doing? Not producing is my best guess. This is the lowest price that iron ore has been in three years. Yes. Three years.


Remember, we wrote about this back in March this year: BHP Billiton iron ore presentation spooks Mr. Market. Even the BHP Billiton forecast was for the iron ore prices to not breech 120 Dollars a ton, that I guess was wrong in the short term. UBS however put out a note suggesting that in the short term the iron ore prices could go back to 125 Dollars a ton, but that there might be weakness again in the short term. The all time high price for iron ore is more than double what the current price is, talk about wild gyrations! So, almost anything could happen between today and the fourth quarter. In the fourth quarter steel demand picks up.


Check this piece out from a crowd called Iron Ore Team: Global iron ore demand soft in H2 VS. supply rising, Baosteel says. Well, not theirs, but this is Baosteel talking. So, what to do? Well, BHP Billiton and Kumba Iron Ore have some of the best margins out of all of the producers. BHP Billiton's outlook over the next decade plus remains unchanged, that is what Marius Kloppers said in the Q&A segment in the last set of results. Should you get anxious? We have said many times that being invested in single commodity stocks, that is always going to be the trickiest of the lot. And that is why we continue to say that as a premier investment choice, BHP Billiton is top of the pile. World class assets, a great management team, a good geographical mix, and a more solid portfolio over the longer run.