Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Kelusa Asia Focus Funds

Equity Bottom-Up

Historically,  iron ore prices and stock prices have been very correlated. This correlation tends to have short term breakdowns, but over the longer term remains intact. I think we are at that point now where stocks are pricing in an iron ore price higher than the current spot.  THE REASON, is the street is assuming lower costs for the iron ore stocks and prices bouncing into end of year restocking but not factoring in a deflationary spiraling of prices. There is a fairly good probability of price dropping a further 15%-20% or more  from here.

Historically,  iron ore prices and stock prices have been very correlated. This correlation tends to have short term breakdowns, but over the longer term remains intact. I think we are at that point now where stocks are pricing in an iron ore price higher than the current spot.  THE REASON, is the street is assuming lower costs for the iron ore stocks and prices bouncing into end of year restocking but not factoring in a deflationary spiraling of prices. There is a fairly good probability of price dropping a further 15%-20% or more  from here.

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Failure of a tailings dam and damage to another at the 50%-&nbsp;owned Samarco iron ore mine in Brazil, in joint venture with&nbsp;Vale, is a disaster.The environmental mess and loss of life&nbsp;dents investor confidence at a time when sentiment for BHP&nbsp;Billiton is fragile as a result of falling commodity prices.Managing director Andrew Mackenzie has responded&nbsp;admirably in trying circumstances, promptly on the ground,&nbsp;offering sincere condolences and pledging BHP's full&nbsp;support in the recovery.That said, in no way do we put a&nbsp;positive spin on the event for BHP.Analysts: Mathew Hodge &amp; Mark Taylor

Failure of a tailings dam and damage to another at the 50%-&nbsp;owned Samarco iron ore mine in Brazil, in joint venture with&nbsp;Vale, is a disaster.The environmental mess and loss of life&nbsp;dents investor confidence at a time when sentiment for BHP&nbsp;Billiton is fragile as a result of falling commodity prices.Managing director Andrew Mackenzie has responded&nbsp;admirably in trying circumstances, promptly on the ground,&nbsp;offering sincere condolences and pledging BHP's full&nbsp;support in the recovery.That said, in no way do we put a&nbsp;positive spin on the event for BHP.Analysts: Mathew Hodge &amp; Mark Taylor

BHP Billiton's Exposure to Samarco Tailings Disaster

Australia

Fortescue Metals Group Ltd. explores for and produces iron ore. The Company conducts business worldwide.

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Fortescue Metals (FMG AU)

Where Is Fortescue Heading ?

Historically, iron ore prices and stock prices have been very correlated. This correlation tends to have short term breakdowns, but over the...

Sameer Taneja

BHP Billiton's Exposure to Samarco Tailings Disaster

Failure of a tailings dam and damage to another at the 50%- owned Samarco iron ore mine in Brazil, in joint venture with Vale, is a disaster.The...

Morningstar, Inc.

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52-week Range

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