Beer baron,
Iron ore do not sell futures like copper or platinum..they used to price iron ore once a year...they may go back to this method who knows...
The future price of iron ore has not been accounted for because the contracts are in real time...they are not futures like copper or oil for say december... They are negotiated prices between real buyers and sellers...not hedge funds or hedgers etc...No bid...guess what.. Prices plummet.
When china decides to cut inventory this is what happens...the steel makers were readily paying
$140 a ton 4 months ago....they are not now...when they need it again they will pay what is needed
to get product...it is that simple. To build a mine takes a lot of capital....but when the entire iron ore community is trying race to cash in on $140 iron ore pricing the costs to build a mine escalate. Look
at Fortescue they were a billion dollars off on their capital expansion program. They have said costs
have come down significantly....but a billion dollars off!! That is spending recklessly. Like all
producers they will cut back.
I hope that helps....when supply is cut which is what is happening already with iron ore pricing dropping like it is...it sets up for higher prices later on...that is all I am saying. There is race in Labrador to be the first "new producer" because there was limited rail room electricity etc...if Alderon does not have to compete for all of these services, labour, engineering, surveying, environmental prices for their build out will come down.
Dazel.