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Iron ore assets fire sales begins
Topic Started: 26 Aug 2014, 11:43 AM (594 Views)
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http://online.wsj.com/articles/cliffs-ceo-non-core-assets-for-sale-at-right-price-1409003129

Cliffs CEO: Non-Core Assets For Sale 'at Right Price'

Iron ore is the main ingredient in the making of steel, and Cliffs’s U.S. mines have benefited from the resurgence of the Detroit auto industry, drill-pipe demand for natural gas wells, and their geographical advantage over iron ore superpowers Brazil and Australia.

Other Cliffs assets, such as coal mines in the U.S., iron ore assets in Australia and Canada and a suspended chromite project in Canada, have been less profitable.

…In an interview, Mr. Goncalves said he would treat those less-profitable assets as “noncore” and seek to turn them around while entertaining offers to sell.

“If somebody offered me a train of money for the U.S. iron ore assets, I would not sell, because that is core” he said. “But if an asset’s noncore and you want to monetize the asset by selling, we’d sell for the best bid as long as the best bid meets the criteria for what we think the asset is worth.” The first priority would be to make all divisions profitable, he added.
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miw
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Wonder how you get to the word "fire sale"? A fire sale is a sale at any price, whereas the article states that it is not a sale at any price.

Cliff's Resources has been in very deep shit for quite a long time.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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Elastic
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miw
26 Aug 2014, 12:36 PM
Wonder how you get to the word "fire sale"? A fire sale is a sale at any price, whereas the article states that it is not a sale at any price.

Cliff's Resources has been in very deep shit for quite a long time.
What's your feeling on the Chinese property market atm MIW?
Only a rat can win a rat race.

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miw
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Elastic
26 Aug 2014, 01:32 PM
What's your feeling on the Chinese property market atm MIW?
Not that the Chinese property market has anything to do with Cliffs, my feeling is that it is flat and has a high probability of going down from here.

I also note, however, that the index for Chinese RE companies (Developers and REITs) stocks has been on a bit of a tear since April, so sentiment seems to be up. That index covers HKG and Macau as well, not sure how much of an impact that has.

The index is below its peaks in 2008 and 2013, but nearly three times the level of 2009 which was the last crash.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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propertymogul
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miw
26 Aug 2014, 01:48 PM
Not that the Chinese property market has anything to do with Cliffs, my feeling is that it is flat and has a high probability of going down from here.

I also note, however, that the index for Chinese RE companies (Developers and REITs) stocks has been on a bit of a tear since April, so sentiment seems to be up. That index covers HKG and Macau as well, not sure how much of an impact that has.

The index is below its peaks in 2008 and 2013, but nearly three times the level of 2009 which was the last crash.
I think the Chinese property market is about to cop a bit of a hammering. Read an article in the Fin Review during the last couple of weeks which said that Chinese property had declined the last 3 consecutive months and that a lot of developers were starting to look like they'll be in financial trouble soon. It also had some negative stat which jumped out at me, can't remember what it was now though.

Not trying to be argumentative, you are on the ground there so would have a better feel for it. For me though I've been expecting a Chinese property downturn for the last 18 mths and this article all but convinced me that it has just started.
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miw
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propertymogul
26 Aug 2014, 03:21 PM
I think the Chinese property market is about to cop a bit of a hammering. Read an article in the Fin Review during the last couple of weeks which said that Chinese property had declined the last 3 consecutive months and that a lot of developers were starting to look like they'll be in financial trouble soon. It also had some negative stat which jumped out at me, can't remember what it was now though.

Not trying to be argumentative, you are on the ground there so would have a better feel for it. For me though I've been expecting a Chinese property downturn for the last 18 mths and this article all but convinced me that it has just started.
Yeah. I am seeing articles like that every day, and like you I have been seeing them for a while. A few things that mean I am not shorting the real estate stocks all the same.

a) The market is volatile, and while there are falls for 3 months in a row, they are small and the market is still solidly above where it was a year ago. May-June is also the slow time here for sales.

b) Most of the articles seem to have come out of interviews with Michael Pettis or Patrick Chovanec. These guys are worth reading - I read their blogs - but they are permabears on China as well and they have not had great success with their prediction to date. They are by no means nutters, but they are certainly the go-to experts if you want interviews to help you write a bearish article.

c) If the people who actually put their money with their mouth is though a crash was coming, the Alphashares China Real Estate Index would not be rising at the moment. Talk is cheap.

BTW if you really want to short China real estate, the ticker symbol TAO in the US tracks the index. It's probably hard to short it, but you can always buy puts.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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