BHP 1.31% $37.15 bhp group limited

message from bluescope

  1. 95 Posts.
    12:45 PM, 30 Oct 2008 Robert Gottliebsen
    Message from Bluescope

    "A number of important events were drawn to my attention today: the continued deleveraging of Wall St and the looming lower iron ore and coking coal prices.

    When the US market surged earlier this week everyone hoped that the massive selling by investment banks and hedge funds might have stopped. It clearly has not and these big fluctuations in the market are simply the result of the sellers playing games to get a better price.

    My comment yesterday (Behind the massive rally, October 29) set out the story and the saga continues. There is value in our market and there is capital available to spend on shares but until the investment banks and hedge funds have cleared their books, buyers need to be careful.

    Bluescope Steel took time out today to explain how a good company operates in times like these. You cut costs, lower your capital expenditure and seek to maximise your advantages. For example, the fall in the Australian dollar has made Bluescope’s Port Kembla steel operation a lot more competitive.

    But buried in the data was the expectation of lower costs for raw materials. In other words, we will continue to see some bad news on iron ore and coking coal prices over the next year or so. The share prices of Rio Tinto and BHP have been well and truly reduced to cover this eventuality but in today’s market – where there is still more deleveraging to come – you can find that shares fall in both the anticipation and the realisation of an event.

    Of course if there is a significant fall in iron ore and coking coal prices then Australian government revenue will be hit at the same time as company revenue. "

    http://www.businessspectator.com.au/bs.nsf/Article/Message-from-Bluescope-KW3N5?OpenDocument&src=kgb

    From one of the best analysts in the business.
 
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$37.15
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