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Navios Maritime Holdings Inc. Message Board

  • foo_star foo_star Sep 5, 2012 5:58 PM Flag

    iron ore demand from china wanes

    Fortescue may be a bellweather here. Reason for caution on NM itself though there's always the poss AF will land a fleet. Meanwhile the other components (non DB) may shine on their own.

    RPT-UPDATE 2-Australia's Fortescue tumbles again, Fitch warns on ratingFont size: A | A | A
    5:48 PM ET 9/5/12 | Reuters
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    *Market Closed

    RPT-UPDATE 2-Australia's Fortescue tumbles again, Fitch warns on rating
    * Fitch revises outlook to negative

    * Shares close down 8.5 pct, hit lowest in three years

    * Sells power station for $300 mln to reduce debt load

    * Move follows a scaling back of expansion plans, job cuts

    * Iron ore price continues slide on weak China demand

    By Miranda Maxwell

    MELBOURNE, Sept 5 (Reuters) - Shares in Australia's Fortescue Metals Group Ltd slid to the lowest in three years on Wednesday, with the company losing $1.4 billion in market value over the past two days on shelved expansion plans and falling iron ore prices.

    Fitch Ratings agency put the company on negative watch, warning that its fortunes were at the mercy of prices for the steelmaking raw material.

    A drop in iron ore prices to their lowest since 2009 has forced Fortescue, saddled with $11.3 billion in long term debt, to slam the brakes on plans to triple its iron ore capacity and announce hundreds of job cuts.

    The decision by Fortescue, which had been one of the most vocal bulls on Chinese demand, highlight how quickly events are moving in the resources sector. The company had reassured investors just last week that its expansion plans were on track.

    Sentiment: Hold

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    • "Buy to the sound of the cannonballs." - Baron Rothschild

      I think the last 5 years have shown that iron ore prices are highly correlated with Chinese economic growth, and when China's economy starts to sputter the regime does not let things go very long before taking action. The overnight announcement of massive new road, subway, etc construction shows that the powers that be there are starting to get a wiggle on to pump growth back up. That is great for iron ore prices, Fortescue, NM, etc.

 
NM
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