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SINCE LAST WEEK CISA HAD BEEN SUCCESSFUL TO REIN IN CONTROL OF THE WILD CAT DISORDERLY ORDERING, SPECULATION AND STOCKPILING OF IRON ORE TO ENFORCE A DISCIPLINED COOPERATION AMONG ITS MEMBERS THEREBY STRENGTHENING ITS NEGOTIATION POSITION AND REMOVE THE INHERENT WEAK IMAGE
THE 3 BIGGIES HAD REFUSED TO ACCEPT 40% - 45% PRICE CUT HAD CAUSED INDIAN SPOT MARKET PRICES TO ARTIFICIALLY RISE AND MOVE PRICE LEVEL TOWARDS 33% - 28% PRICE CUT LEVEL AS MARKET WITNESSED NO NEW INITIATIVES FROM CISA STRATEGIES.
HOWEVER CISA HAD ACTED CORRECTLY BY REMAINING STATUS QUO. IF CISA HAD ACTED OUT OF BEING CORNERED, LACK POLITICAL WILL TO FIGHT BACK AFTER BEING SLAPPED WITH 500% PRICE INCREASE FROM 1994 TO 2008, AND LACK OF STRONG EFFECTIVE COUNTER MEASURES TO ACCEPT 33% PRICE CUT------CHINA LOOSE SOVEREIGNTY FACE AS BIGGEST IMPORTER WITH WEAK PRICING LEADERSHIP IMAGE UNABLE TO CALL THE SHOT WHICH MEANS CHINA KOWTOWS TO 3 BIGGIES AND INDIA TO OPEN THE FLOODGATE FOR ANOTHER PRICE INCREASE OF X% FOR 2010 AND BEYOND.
WILL CISA AND ITS MEMBERS BE CORNERED AS LOSER IN THIS BUSINESS WARFARE AS BEING A COUNTRY WITH MORE THAN US$1.5 TRILLION FOREIGN RESERVES AND THE ORIGINATOR OF " THE ART OF WAR STRATEGIES BY SUN TSE " BUT ADAPTED CLEVERLY BY 3 BIGGIES AND INDIAN TO FIGHT COMMERCIAL AGAINST CHINA .THE RIGHT ANSWER INDICATED BY CISA IS NO---NEVER SURRENDER AND STANDS TALL.
CISA SHOULD ADOPT FURTHER NEW STRATEGIES TO SUCCEED
1. DEEP CUT IN STOCKPILING
CISA SHOULD ADOPT PROTRACTED BUSINESS WARFARE TO TIRED OUT THE 3 BIGGIES WITH DEEP CUT IN STOCKPILING ORDER THROUGH THE COORDINATED COOPERATION OF CISA MEMBERS THAT WILL HIT THEIR MONTHLY FINANCIAL SALES AND PROFIT FORECAST.
2. STOP CAPESIZE BULK CARRIERS
CISA SHOULD SELECTIVELY DISALLOW CAPESIZE BULK CARRIERS FROM 3 BIGGIES TO DISCHARGE IRON ORES AT MAIN PORTS IN NORTH CHINA TO PREVENT ITS MEMBERS IMPORTING IRON ORE FOR HOARDING AND PROFITEERING SPECULATION AS AGAINST THE OBJECTIVES.
3. STOP FAKING DEMAND
ADOPT JUST-IN-TIME DELIVERY SYSTEM TO PREVENT BUILDING SURPLUS INVENTORY TO FAKE HUGE DEMAND FOR IRON ORE TO MAKE CRUDE STEEL FOR EXPORT WHILE MOST OF THE WORLD COUNTRIES ARE STILL STRUGGLING TO RECOVER FROM RECESSION DUE TO USA FINANCIAL MELT DOWN. CHINESE ARE CLEVER IN FAKING ON THE WORLD STAGE -----
THE KOREAN AND JAPANESE NEVER CHOKED THEIR PORTS WITH OVER EXCESSIVE STOCK PILING OF IRON ORE BUT SILENTLY BLAME CISA UNCONTROLLED MEMBERS OF FAKING DEMAND TO CAUSE THEM TO ACCEPT 33% AND 28% CUT WHICH OTHERWISE WOULD HAVE ENJOY THE SUCCESS FOR WITH CISA FOR 40-45% CUT.
THE LESSON OF FAKING DEMAND SHOULD NOT BE REPEATED OTHERWISE CISA WILL SUFFER PRICE INCREASE FOR 2010.
4. INCREASE PRICE COMPETITION
CISA SHOULD INCREASED EFFORT TO DIVERSIFY BUYING FROM NEARBY IRON ORE
PRODUCING COUNTRIES E.G INDONESIA ON FOB BASIS TO INCREASE SPOT SUPPLIES BY 10 TIMES TO ENTER SPOT MARKET SO AS TO PRESSURE PRICING EQUILIBRIUM SHIFT FROM NEAR SPOT PRICES = 33% TO NEW EQUILIBRIUM 45% CUT LEVEL. INDIAN SUPPLIERS HOPING TO INCREASE SPOT PRICES WEEKS AFTER WEEKS BEYOND US$78 /DMT UNBATED WILL BE STOPPED BY INCREASED MARKET COMPETITION PRESSURE.
5. PROVIDE BULK CARRIERS TO CONTROL FREIGHT
CISA SHOULD ARRANGE SET UP SHIPPING FUNDS TO BUY ENOUGH BULK CARRIERS TO CONTROL OCEAN FREIGHT COST AND POSE DIRECT CHALLLENGE TO BALTIC DRY INDEX. FOR EVERY US$1.00 REDUCTION IN PRICE, THERE IS SAVING OF US$500 MILLION PER YEAR SUFFICIENT TO PURCHASE FLEET OF BULK CARRIERS TO EXERT PRICE PRESSURE ON 3 BIGGIES AND INDIAN SUPPLIERS FOR LOWER FOB AND HENCE A LOWER CIF PRICES.
THE EXPERIENCE OF RUNAWAY FREIGHT RATE IN 2008 SHOULD NOT BE REPEATED.
JAMES SIMCH - SINGAPORE
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