Eadwig
13 Feb 2017
Re: Continued growth in China driving up ore... Rhigos, "Better than expected growth in China has resulted in them importing more raw materials particularly iron ore."I'm not sure this statement isn't a bit misleading. There's no doubt China has been importing more raw materials, including coal despite it being easily the world's biggest producer, but with coal this was a direct result of Chinese government policy to:* Limit the number of days work done by individual miners.* To generally pay more attention to buying materials at a lower cost on the global market instead of effectively subsidising local industry by buying from internal uneconomic sources.The combined affect of the two policies saw the large rise in coal prices we've experienced over the last 10 or 12 months, but so far as I have been able to tell this has been through adjustments by external suppliers to provide the required supply, rather than a greater than anticipated growth in global demand.Similarly, China has helped contribute to the rise in oil prices by allowing around 300k bp/d fall off in production (from memory) from ageing fields rather than continuing to extract at ever growing cost.These policies also appear to have contributed to the rising price of copper and no doubt some other minerals also. The maximum working days directive was across all mine workers (and possibly other sectors too, I'm unsure). In many cases mine owners appear top have not chosen to take on more workers to make up for shortfalls in production.On the other hand, there was also a partial return to extra infrastructure spending as a definite policy decision to 'soften the landing' as the government continues to attempt to realign the economy from an emerging/manufacturing market to a more consumer-led developed economy.I'm not sure how any of the above impacts Iron Ore and Steel specifically, which is most important to RIO. There are other shorter-term impacts on RIO to be considered also - see next post.
Rhigos
13 Feb 2017
Continued growth in China driving up ore prices Better than expected growth in China has resulted in them importing more raw materials particularly iron ore. This morning general miners outperforming broader market, this despite UKP rising against USD.Broker consensus on RIO is hold, which seems a bit weak considering SP in last 12 months has more than doubled and as yet no sign of trend turning down.Forecast growth indicators are all above 3 year average these are percentage growth figures:Turnover growth 10.2% ,EBIT 47.1%, Pre-tax profit 84.7%, Norm EPS 50.1%.I do realise that these look exceptionally good because a year or so ago RIO was not doing at all well due to the sudden fall in commodity prices due to shift in supply and demand.
Rhigos
10 Feb 2017
Bloomberg: Iron Ore +5% this morning Bloomberg TV before 8:30 this morning reported that iron ore was up 5% which explains SP rise. There was a discussion of ore supply and it seems that production is increasing from various companies across the world which will soon depress price.I understand reason why price gone up is because Chinese government restricted number of days their iron refineries can operate so they need higher grade ore. Restriction I think because of pollution and over capacity for iron production (which got EU iron producers angry when they dumped surplus iron on EU).
LK Hyman
10 Feb 2017
New NEDs The three newbs are all real heavyweights ... especially Simon Henry off of Shell.Why, oh why, didn't Shell buy RIO back in the day instead of that munter Billiton, eh?LKH on the flybridge
videodawn
08 Feb 2017
Re: BHP shutting down Escondida copper m... UbiqI think the root cause of the problem here is that any investment house can be both a broker and a market maker, albeit with Chinese walls, (LOL) as a result of the 1986 reforms to the UK stock market.The MM arm of the business makes money from the spread and the broker arm makes money from the commission, neither loses any money no matter which way the market moves, and so it is a systemic cream off of money from the retail clients every day, all day long.In a flat market the buy side client would be seen to be the loser every day by such an arrangement, so someone needs to make that client think he can make money. Enter the Analyst, or for that matter the BB ramper, but the Analyst is either another arm of the broker or is a pumper journalist paid for by the broker or his sell side client. The Chinese wall does not work. That is where the manipulation goes on, and on, and on, and on ad infinitum IMO. I could give you endless examples, but you know them anyway.
