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Cline Mining Corporation T.CMK



TSX:CMK - Post by User

Post by bond46on Jul 07, 2012 1:17pm
352 Views
Post# 20091650

re: pushing on a string

re: pushing on a string

It was almost 2 years ago that the yearly met contracts, miners and steel makers used to sign every April the first for quite a few years, came to an end. The end of yearly contracts came at a time of big demand for met coal partly due to the floods in Queensland, Australia, and partly due to the abuses, mainly by the Chinese who would sign yearly contracts at discount rates and then turn around and sell the met coal at the spot market at a much higher price. When the main coal suppliers BHP, Rio Tinto and Vale, found out what these people were doing, they refused to sign yearly contracts and went quarterly, BHP has gone monthly. But that was ok  when the market was a sellers market. But now that the market is a buyers market, these companies tend to regret the abandoment of the yearly contract system. In a buyers market, the steel makers do not have to sign any contracts at fixed prices because they can find the met coal and iron ore much cheaper in the spot market. And unless the spot market shoots higher, much higher than the contract pices, the Steel makers would not sign contracts with the coal suppliers for obvious reasons. This is the situation with China today; the steel producers get their orders from the Chinese Government and the order applies nation-wide. It's no wonder therefore that Casey can't get the Chinese sign any contract. If in a sellers market the met coal suppliers are pulling the strings, in a buyer's market are pushing the strings. So take it from there.

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