Please read article below. Anyone who is selling their dry bulk shipping shares at these low prices is crazy. This article is from yesterday. If demand for iron ore was down, RIO would not be increasing prices so much. Who do you guys think is going to ship all of this iron ore.....very bullish multi-year story....Im buying all the way to $125.
Rio Will Be More `Aggressive' in Iron-Ore Talks, Lehman Says
By Brett Foley
Dec. 19 (Bloomberg) -- Rio Tinto Group, the world's second- largest iron-ore exporter, will be ``more aggressive'' in annual supply talks with steelmakers and prices next year will be higher than expected, Lehman Brothers Holdings Inc. said.
Rio ``has often been accused of being too nice'' in previous talks, instead favoring ``good long-term relationships'' with steelmakers, London-based Lehman analysts including Christopher LaFemina said in a report today.
``This time may be very different,'' LaFemina said. Securing contract prices that beat estimates will boost Rio's market value and increase the price potential suitor BHP Billiton Ltd. must pay to acquire the company, he added.
The London-based miner last month rejected a $122 billion offer from BHP as too low. ``Aggressively bargaining'' for a rise in the 2008 iron-ore contract price would be a way for Rio to ``prove this claim to the market,'' LaFemina said.
Rio said yesterday it will more than triple iron-ore sales in the cash market to capitalize on prices, which have tripled in five years to a record. Most of its supplies are sold via annual negotiated contracts. So-called spot prices, including freight costs, are about double contract prices.
Contract prices will rise 50 percent next year on demand from China, the world's largest steelmaker, compared with a market consensus of 35 percent, LaFemina said.
Lehman increased its forecast for Rio's 2008 earnings before interest, tax, depreciation and amortization by 3 percent to $641 million to account for increased spot sales. The bank has a ``positive'' rating on the stock.
Brazil's Cia. Vale do Rio Doce is the world's largest ion- ore miner.