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Iron Ore Price

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Not applicable
I just wonder if local steel prizes are coming down as well, wont that bring cost down in mining and other industry even for security fencing, etc
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Preston
Super Contributor
Kwagga, i respect your comment. I did an exhaustive exercise on the manner in which you average down and the timing of the average down. I am not going to invest a large sum at once. Everytime the share make a low as per technical indicators , you invest R15000. The massive investment comes when the turn occur.So basically, i am not timing the share price at which you invest but allowing technical indicator to guide me. I must admit all credits on the investment amount, does belong to Simon Brown after he tweeted his holding in his momentum portfilio last year.
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Preston
Super Contributor
Kwagga, i respect your comment. I did an exhaustive exercise on the manner in which you average down and the timing of the average down. I am not going to invest a large sum at once. Everytime the share make a low as per technical indicators , you invest R15000. The massive investment comes when the turn occur.So basically, i am not timing the share price at which you invest but allowing technical indicator to guide me. I must admit all credits on the investment amount, does belong to Simon Brown after he tweeted his holding in his momentum portfilio last year.
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SimonPB
Valued Contributor
Joch, yes steel prices are down how much depends on whether the steel is being priced in export parity or not, of course in part off set by power / labur cost increases .. thing is while steel is an important part of the cost for construction and mining, the bigger issue is amount or work for construction and commodity prices .. neither which in their favour
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SimonPB
Valued Contributor
no come on, KIO can go bust without SA going bust ..
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J12
Frequent Contributor
Ok, so we all agree that demand from China is tapering off. This, apparently is expected from most maturing economies just as it happenned with US and Europe. Don't think we can really call China an 'emerging market' anymore. So, in the short/medium term, demand is falling and supply, surprisingly enough is increasing. Massive glut is putting pressure on prices even at $50 per tonne. The big miners know that this is the time to compete out 'smaller' suppliers, but it seems as if larger suppliers may get muscled out as well... in this case KIO. I think one of the main reasons why KIO is being targeted is it's large debt pile, specifically, how long could it last in a loss making environment. As long as suppliers are still producing profitably, they will most likely continue to produce. As soon as they are making losses, the question becomes, "How long can they survive?". And when you're sitting with a lot of debt, the answer is "Not long". Some reports are predicting that KIO will be closing it's doors. If the price drops to $30, most likely, KIO will eventually close up shop, but how long would they last at that level?
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J12
Frequent Contributor
On the demand side, perhaps there are new markets that may become large consumers of steel in the future. Specifically, India. India has a population that is very close to that of China and predicted to surpass China's population within the next decade. Their GDP is roughly a quarter of China's and they have a president who is now focusing on growing the economy and creating jobs. If he succeeds, there should be a growing middle class who would be demanding more housing and thus construction should be increasing etc., etc. which means more demand for steel. My guess is that's where the next super cycle would come from. And the next one from Africa after that. Or perhaps they happen together for a super super cycle. In any case, less supply would be better for the price, so hopefully, that will reduce sufficiently. Just on the point of that local steel mill... I think it's a bit stupid to be building a new state steel mill at this time esp. with the Evraz story, but I would have to guess that they're building it in anticipation of a recovery in prices due to demand from China or some emerging market.
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CHATTYCHAT
Super Contributor
Agreed that it is stupid to build a new state mill. This is part of the stupid idea that business should be state owned inter alia to preserve jobs. Another soft cushion for another cadre and his/her brothers/sisters... may I add "in crime".
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SimonPB
Valued Contributor
J12, nice thoughts .. yip India the one to watch, no indication that the are replacing China, but they could and if they do then it is game on for another massive up cycle in commodities ..

KIO problem is that current costs are in the order of US$45 whereas RIO and BIL are around US$20, so they are seriously trying to squeeze miners out and as you say, forget squeezing the small guy, squeeze the big one .. KIO also has issues with strip ratio worsening, head grades dropping etc. this expected as mines age, you mine the easy stuff to start but happening at the wrong time for KIO
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Prestonmyhusban
Regular Contributor
@simon, before you engage in an argument. Please have a look at Page 6 of the latest term result for Kumba 30 June 2015 , where there disclosed the unit cash cost of Sishen and Kolomela mine as 32.7 dollar and 21.4 dollar. Kumba applied an exchange rate o
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Preston
Super Contributor
Simon , that comment is from me.
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SimonPB
Valued Contributor
preston, we have agreed to disagree on this one
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Preston
Super Contributor
@simon, then please provide your expert opinion on the calculation.
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