NKSK version 2

Short selling can't be blamed on drops like today's though when it lost around 11% - way more than the stock market and other miners. And I'd have thought that the stage of FMG with regards to where it is on the production cycle would have been priced into the share price months and months ago.

I don't know - your earlier post about all of the projects which are on-going and which are planned is certainly convincing but the hammering that FMG (and to a lesser extent Rio and BHP) has taken seems to suggest that the market knows something or suspects something which goes way beyond the list of projects.

Rio has fallen from over $150 a share in May to $85 today - not far off a 50%fall in 4 months.

And what I find puzzling about this is that the one thing that is supposedly going to see Australia through the credit mess is the demand from China and the earnings from Rio, BHP and FMG. If the markets agreed with this prognosis then surely the share prices of the miners would have fallen proportionately less than the shares in other stocks...?

jimbo_d

It's because of the fear that the drop in commodity prices through the US/Euro recessions causing China's earnings to fall and therefore demand for Australian raw materials. Spot prices on most metals are plummetting and mining companies as well as everyone else cannot get funding for new ventures. Depends on how long this continues but I fear the mining boom in WA is well and truely over.

NKSK version 2

Yes possibly - but if you read Amazulu's earlier post it seems that the market is thinking one thing and the miners are thinking something completely different. This is what I find interesting...

NKSK version 2

BTW, back to housing for a minute.

Had a complete shock today when I received the latest free REIWA "newspaper" in the post. The headline story was from an RE outfit called Ausnet which basically was very gloomy about the outlook for Perth house prices over the next two years and was trying to persuade sellers to stop holding out for a recovery and to start pricing realistically.

For the first time that I can recall, REIWA said that migration to WA and the China story are not going to be the answers to Perth's price slump.

First time I've read something so gloomy from REIWA and the first time I've read something from REIWA which debunked the China and in-migration price support theory.

This was in the freebie newspaper entitled Real Estate News (North) or something - anybody else get this?

renth

They've finally realised (too late) that turnover is the lifeblood to estate agents, not ever rising prices.

Amazulu

Maybe all the uncertainty in the global economy is causing this. It certainly explains a lot of the other share price falls. Seems like everyone is edgy. Someone posted a rumour that Steve Jobs had suffered a heart attack. This caused Apple stocks to plummet. When the rumour was found to be untrue, Apple stocks rebounded.

Lots of crazy shit happening at the moment.

Amazulu

Not so sure about this. Andrew Forrest has a majority sharholding in FMG. His mate Graeme Rowley has a big chunk too. If you listen to what Forrest is saying (and believe him, which I do), he is more interested in opening up the Pilbara to competition and breaking the duopoly of BHPB and Rio than making loads of money and then selling out. I think he wants to make loads of money but on his terms. I've spoken to him a few times, and listened to him talk on numerous occassions and he is not your average billionaire. The difference between him and Kloppers and the Rio guy is stark.

NKSK version 2

Just read this from today's Independent (live update of the LSE):

Miners added to the pain after investment bank UBS warned earnings in the mining sector could fall by a further 46 per cent in 2008. It also said that commodity prices could drop another 25 per cent.


The whole sector tumbled, with Kazakhmys off 19 per cent or 109.5p to 459.5p and Antofagasta down 46.75p at 333.5p.

Amazulu

Just got this:
http://seek.com.au/users/apply/index...35&cid=jobmail

That's a lot of people. I know agents are known to talk shit at times but I know this mob, and they are the most reliable engineering agency in WA.

Amazulu

Graeme Rowley just gave us all a talk about the current situation and he kind of confirmed some of the points I made in my earlier post. I think they are worried about the share price - it's just over $4 at the moment - and this is weighing them down a bit. But he also said that if the company can ramp up production, deliver the tonnage of a good quality product at a price they can make a profit on, then the revenue will come in, make more profit, increase the share price and allow for expansion. He reiterated that they believe the fundamentals of the Asian iron-ore market are sound.

Time will tell.

NKSK version 2

"But he also said that if the company can ramp up production" any ideas why this was an "if" and not a "when"?

I've just read an article which suggested that high commoduity prices up to July this year were a result of speculaton rather than fundamentals.

Do you know if speculation can impact on the spot price for iron ore?

Amazulu

Okay, 'can' was probably the wrong word to use. Production IS ramping up. The mine is not yet at full production. The plan is to be at 45mtpa by sometime next year - and then 55mtpa when optimisation is finished, also next year. They are having some dynamic/braking issues on conveyors that is limiting tonnage a bit, but these are being sorted out. We've just been told that we need to design a new high pressure crusher to better process the big lump that they are getting through the system.

As most iron-ore is not traded on world markets, I'm not sure that speculation can have the same affect as commodities that are. I think it has been shown, without a doubt, that a lot of the recent rise/fall in commodity prices has been down to speculation.