The astounding 65% price hikes reported Tuesday here at the Fence Wizard Blog for new iron ore contracts may not be the last of the short term increase. This signals that 2008 will be the sixth straight year for record high iron ore prices. The key problem for any price relief is that just 3 companies control 75% of the worlds iron ore production and emerging markets continue to pressure supply even as U.S. demand slows. Two of those companies may combine as BHP Billiton has been attempting to takeover Rio Tinto for months.
Q> What does this hike mean for final products such as rolled steel or chain link for final buyers such as fence companies?
A> Most likely a 10% or so bump in finished product costs; some good news is that zinc is about 50% lower than the highs reached in Dec2006-Jan2007.
More:
Rio Tinto, BHP want more than 65% increase for iron ore. Rio Tinto (RTP) has indicated it is not satisfied with the 65% iron ore price increase negotiated by Vale (RIO) and Posco (PKX). If it doesn't back down, this may be the beginning of the end for iron ore's benchmark system, under which global iron ore prices follow prices set by Vale, Rio Tinto and BHP Billiton (BHP), who together produce almost 3/4 of the world's iron ore. Rio contends Asian steel mills are saving money due to its proximity to them, and wants a piece of their savings. There are rumors BHP will also hold out for more.
Rolled Steel Price Chart
Kitco Zinc Chart
Thursday, February 21, 2008
More pressure added to iron ore prices...
Tuesday, February 19, 2008
Outlook worsens for 2008 U.S. Construction Recovery
It may have seemed like a slow news day with a couple Presidential Primaries, the Dow Jones Industrial Average down just 10.99, and no updates to be found about Britney Spears. Unfortunately, some frightening data came forward today that will add pressure to Fence Installers and other construction services around the country.
1. Bush tax cuts will not become permanent and will expire.
2. Capital Gains taxes will rise from the current 15% to 28% or beyond on your investments.
3. Death Tax Law will likely become increasingly confiscatory with the current allowance of 3.5 million most likely reduced. Currently, 22,0000 families are penalized each year - many are family businesses. Large Corporations are not affected and will only gain the additional advantage of buying more small business at give away prices. (More on Obama's tax plan)
Monday, February 18, 2008
How to spend about $400,000.00 in March.
Want to be at the center of the online Fence Universe?
"www.fence.com" goes up for auction on ebay on March 26th, 2008. The reserve is a mere $225,000.00 so make sure your accounts receivables are in order.
If you are more of a bargain shopper you may want to check out "www.decking.com" that will also auction on Ebay 2 days after Fence.com. The reserve for this site is just $95,000.00 (just pocket change really). If you were curious "www.deck.com" already exists; as always just click on the blue words to magically travel to all Fence Wizard Links.
Here is a tip that may save you a fortune: "www.cantaffordawebsite.com" still seems to be available. Supply limited to one of course.
