Ferro china fails to pay loans

Ferrochina fails to pay loans

9 oct 1636 HRS (+8 GMT)

SINGAPORE - Singapore-listed FerroChina said on Thursday it was unable to repay some of its working capital loans worth about 706 million yuan (US$104 million).

The steelmaker also said it has 2.03 billon yuan worth of loan facilities and notes that may become due and payable.

'The company is currently in active negotiations with its financial lenders,' the statement said.

'There is however no assurance that such negotiations or discussions will be successful, in which event, the group will not have sufficient cash to satisfy its financial obligations,' the firm said.

The firm has temporarily stopped its manufacturing operations in Jiangsu, China.

Shares in FerroChina will remain suspended until further notice, the firm added. -- REUTERS

Ferro China 300908

Ever since breaking the 0.660 support (pink ...) after our discussion on 12 sep, Ferro China didn't quite manage to break it after trading sideways last week. Ferrochina even opened below the 0.570 support (red --) today, before closing close to the downtrend resistance (upp red).

Has Ferro China formed a double-bottom?

If you recall, FerroChina's chart looks similar to those of China Hongxing's and Cosco's. The 0.660 neckline (pink ...) now looks to be quite a strong resistance, with the uptrend resistance (mid blue) and downtrend resistance (mid pink) also meeting at the 0.660 level towards the end of the week.

However, if Ferro China manages to break the 0.660 neckline, judging from the volume distribution bars, there won't be much of an obstacle after that. However, given the recent market sentiments, I won't be surprised if FerroChina forms multiple bottoms.



For thursday :

Support @ 0.608 (upp red), 0.570 (red --), 0.530 (mid red), 0.510 (low blue), 0.485 (low red), 0.455 (low pink)

Resistance @ 0.650 (mid blue), 0.660 (pink ...), 0.672 (mid blue), 0.705 (upp blue), 0.730 (grey)

Ferro China 120908

FerroChina continues to trade within the downtrend channel (red), but more importantly, Ferro China broke the 1st downtrend support (mid red), long term downtrend support (low pink), and also the psychological 0.700 support level.

I said on 5 sep that we could see some rebound when FerroChina hits the 0.700 level. However, if the rebound doesn't materialise, we could see Ferro China weakening further to the neckline support of 0.540 which I also mentioned on 5 sep.



For monday :

Support @ 0.675 (pink ...), 0.667 (mid red), 0.550 (low red)
Resistance @ 0.691 (low pink), 0.750 (upp red), 0.806 (mid pink), 0.890 (lightblue ...)

Ferro China 050908

After testing the 0.890 support (lightblue ...) and the 1st long term downtrend support (mid pink) on 2 sep, Ferro China finally broke both of them yesterday (4 sep).

We could eventually see FerroChina hitting the 0.700 level before there's any chance of a rebound.

Ferro China formed a double-top - with 1st top around early may, and the 2nd top at the beginning of aug. If we take the neckline to be 1.26, we're looking at 0.78 to be the support (1.74 - 1.26 = 0.48 then 1.26 - 0.48 = 0.78), which we have hit today (blue --).

If Ferro China breaks the 0.78 support as well, the next support could go as low as 0.540, which is the difference between the 1.14 neckline (red ...) and the peak (1.74 - 1.14 = 0.60 then 1.14 - 0.60 = 0.540).

Although FerroChina is now trading within the downtrend channel (red), we could still see some form of rebound when it hits the 0.700 level.



For monday :

Support @ 0.780 (blue --), 0.745 (low red), 0.725 (low pink)
Resistance @ 0.817 (upp red), 0.841 (mid pink), 0.890 (lightblue ...)

Ferro China 290808

After breaking the 0.985 support (blue --) on 25 aug, we saw Ferro China almost testing the long term downtrend support (low pink). We did see FerroChina breaking the support the following day (26 aug) but it seems Ferro China found some support at the 0.890 level (lightblue ...).

We could be looking at FerroChina attempting to consolidate around the 0.890 - 0.900 levels next week, provided it doesn't break the 0.890 support (lightblue ...).

If the 0.890 support breaks, we could see Ferro China testing the 0.800 level.



For monday :

Support @ 0.890 (lightblue ...), 0.885 (upp red), 0.875 (low pink), 0.820 (low red)
Resistance @ 0.915 (green --), 0.930 (lightblue --), 0.945 (mid pink), 0.985 (blue --)

Ferro China 220808

Ferro China tested the long term downtrend support (low pink) after we last discussed on 19 aug. Based on the volume distribution bars, the resistance looks to be around the 1.02 level (red --) and the support around the 0.985 level (blue --).

We could be looking at FerroChina trading between these 2 levels for next week. We may see some action next week when the 1st long term downtrend resistance (mid pink) meets the 1.02 resistance (red --).

Even if Ferro China manages to break the 1st long term downtrend resistance (mid pink), its break would most likely to cap by the 1.07 resistance (green --).

There is also a possibility of FerroChina testing the long term downtrend support (low pink) if it breaks the 0.985 support (blue --).



For monday :

Support @ 0.985 (blue --), 0.960, 0.915 (low pink)
Resistance @ 1.02 (red --), 1.036 (mid pink), 1.07 (green --), 1.11 (pink ...), 1.14 (red ...)

Ferro China 190808

Ferro China today gapped down and broke the 1.07 support (green --). It closed at 1.01, which is the price it hit back on 1 feb, which Ferro China then went on a fierce and steep rebound.

Would it be the same this time ?

For that to happen, we would first need FerroChina to recover above the long term downtrend support (mid pink) and the 1.07 support (green --), and stay above these 2 supports.

Otherwise, we might see Ferro China gradually heading towards the 0.90 level as indicated by the long term downtrend support (low pink).



For tomorrow :

Support @ 1.01, 0.940 (low pink)
Resistance @ 1.04 (mid pink), 1.07 (green --), 1.11 (pink ...), 1.14 (red ...)

Ferro China 150808

After our last discussion, Ferro China's 1.31 support (lightblue ...) broke at the beginning of the week, and FerroChina never came close to testing it again. Ferro China even broke the 1.26 support (green ...) and 1.22 support (blue --) today.

If Ferro China fails to hold onto the long term downtrend support (low pink), we could be looking at the 1.17 support (lightblue --) being tested next week.

However, if FerroChina manages to trade above the 1.22 support (blue --), we could see it trading sideways, with 1.26 being the resistance (green ...).



For monday :

Support @ 1.19 (low pink), 1.174 (low red, low blue), 1.17 (blue --), 1.14 (red ...)
Resistance @ 1.22 (blue --), 1.23 (mid red), 1.243 (mid blue), 1.255 (mid pink), 1.26 (green ...)

Ferro China 080808

Although Ferro China broke the 1.34 neckline on 1 aug, it did not quite reach the same peak it did back in may. It also seems more likely FerroChina could have peaked, as its highs have been lower since the beginning of the week.

Since Ferro China still has not tested the 1.31 support (lightblue ...), there could still be a chance that it is going through a profit-taking phase.

However, we can also see from the chart that the downtrend resistance (upp red) meets the uptrend support (low green) at the 1.34 neckline (blue ...) next week. So next week could be crucial for FerroChina.

If Ferro China can stay above 1.34, we could see it trading sideways before attempting to test the 1.38 (pink ...) resistance.

Otherwise, the 1.31 support (lightblue ...) could be in for some severe test.



For monday :

Support @ 1.34 (blue ...), 1.33 (low green), 1.31 (llightblue ...), 1.29 (low pink, upp blue), 1.28 (low red)

Resistance @ 1.344 (upp red), 1.38 (pink ...), 1.388 (upp green), 1.395 (upp pink)

Ferro China 050808

Although FerroChina tested the 1.34 (blue ...) and 1.31 (light blue ...) supports today, as well as the long term downtrend support (low pink), and uptrend support (low green), Ferro China managed to recover and close above all those supports which it tested.

So, is Ferro China taking a breather, or has it peaked already?

If FerroChina opens above the 1.34 support (blue ...) tomorrow, I think it would at most test the long term downtrend resistance.

If Ferro China opens below the 1.34 support, we may see it testing the 1.26 support (green ...)



For tomorrow :

Support @ 1.347 (low green), 1.34 (blue ...), 1.31 (low pink, lightblue ...), 1.276 (upp blue), 1.26 (green ...), 1.22 (blue --)

Resistance @ 1.38 (pink ...), 1.42 (mid green, upp pink), 1.44 (red --)1.47 (upp green)

Ferro China 010808

Ferro China broke the 1.34 neckline (blue ...) on the 3rd try. Furthermore, FerroChina also broke the long term downtrend resistance (upp pink), 1.38 resistance (pink ...) and uptrend resistance (upp green). The breakout was also accompanied with high volume.

We could be seeing a potential explosion for Ferro China to it high during May. However, FerroChina is also now trading very near to the 1.44 resistance (red --), which is from where it gapped down on 9 jun.

If Ferro China stays above the 1.38 level (pink ...), we could see it testing the 1.44 resistance next week. Or we could be seeing it trade sideways between the 1.38 (blue ...) and 1.34 (lightblue ...) levels.

If Ferro China breaks the 1.34 support, we could see it trading sideways between the 1.26 support (green ...) and 1.34 level.



For monday :

Support @ 1.415 (upp green), 1.38 (mid green, pink ...), 1.35 (upp pink), 1.32 (mid pink), 1.31 (low green, lightblue ...), 1.295 (low pink), 1.269 (upp blue), 1.26 (green ...)

Resistance @ 1.42, 1.44 (red --), 1.49 (green --)

Ferro China 290708

Ferro China continued its relentless push upwards, breaking the 1.31 resistance (light blue ...) and closing right on the 1.34 resistance (blue ...) and uptrend resistance (upp green). FerroChina also broke the long term downtrend resistance (upp pink).

Ferro China could also be forming the Reverse Head & Shoulders formation - with the left shoulder on 13 jun (1.24), Head on 4 jul (1.05) and right shoulder on 25 jul (1.22). I believe the right shoulder hasn't been completed yet, and we might see FerroChina testing the 1.34 neckline (blue ...) several more times.

The Reverse Head & Shoulders formation is quite a strong reversal indicator. Provided Ferro China successfully breaks the 1.34 neckline (blue ...). If that happens, we could potentially see FerroChina hitting a high of 1.63 (1.34 - 1.05 = 0.29, 1.34 + 0.29 = 1.63) which is the roughly the support level (green --) for FerroChina during the surge in price in may.

Of course, if Ferro China doesn't break the 1.34 neckline, its fall would be equally dramatic as its rise.



For tomorrow :

Support @ 1.34 (blue ...), 1.32 (upp pink, mid green), 1.31 (light blue ...), 1.26 green ...), 1.256 (upp blue), 1.247 (low green), 1.237 (mid pink), 1.22 (blue --)

Resistance @ 1.355 (upp green), 1.38 (pink ...). 1.40, 1.43

Ferro China 250708

Ferro China burst back into life after testing the 1.09 support (pink ...) and uptrend support (low blue) on 18 jul. FerroChina also broke the previous long term downtrend resistance (low pink) and 1.22 neckline (blue --) on 23 jul.

Although Ferro China has managed to stay above this neckline so far, we can also see that volume is gradually falling. From the chart, we can also see that the long term downtrend resistance (mid pink) meets the uptrend resistance (upp blue) 1.25 level. So we might see somemore action next week.

If FerroChina can open above the 1.25 level, and/or break the 1.26 resistance (green ...), we could see FerroChina exploding up for another round, possibly testing the 1.31 resistance (light blue ...).

Otherwise, we could see more profit-taking next week, with Ferro China testing the uptrend support (mid blue), and 1.17 support (light blue --).



For monday :

Support @ 1.25 (mid pink, upp blue), 1.22 (blue --), 1.183 (mid blue), 1.177 (low pink), 1.17 (light blue --), 1.14 (red ...)

Resistance @ 1.26 (green ...), 1.31 (light blue ...), 1.33 (upp pink), 1.34 (blue ...)

Ferro China 180708

Ferro China did open at 1.16 on 14 jul. It even tested the long term downtrend resistance (mid pink) before closing on the 1.17 resistance (light blue --) on 14 jul.

But more importantly, FerroChina also tested the 1.14 support everyday since 14 jul, and it finally broke it today, tested the 1.09 support (pink ...), before closing right on the 1.11 support (red --) today, which was quite close to what I've said on 11 jul.

If Ferro China breaks the 1.09 support (pink ...), we could see it test the 1.07 support (based on volume distribution) first. And if the 1.07 support holds, we could see FerroChina trading sideways.

If the 1.07 support breaks, we could see Ferro China testing the 1.05 support (blue ...), which is also the support indicated by the long term downtrend support (low pink).



For monday :

Support @ 1.093 (low blue), 1.09 (pink ...), 1.07, 1.06 (low red), 1.05 (blue ...), 1.047 (low pink)
Resistance @ 1.11 (mid red, red --), 1.14 (red ...), 1.153 (mid pink), 1.158 (upp red), 1.163 (upp blue), 1.17 (light blue --)

Ferro China 110708

After hitting a low of 1.05 on 4 jul, FerroChina managed to recover and even trade above the 1.11 resistance (red --). Trading this week was more or less range bound between the 1.11 support and 1.18 resistance (light blue --).

We could see some action next week as the downtrend resistance (upp red) meets the uptrend support (low blue) at abt the 1.16 level.

If Ferro China trades above the 1.16 level, we could see it continue its uptrend and test the 1st long term downtrend resistance (mid pink), or even the 1.22 resistance (blue --).

However, if FerroChina breaks the uptrend support (low blue), we would most likely see it revisiting the 1.11 support (red --).



For monday :

Support @ 1.15 (low blue), 1.11 (red --), 1.057 (low red), 1.05 (red ...), 1.02 (low pink)

Resistance @ 1.17 (upp red), 1.18 (light blue --), 1.19 (mid pink), 1.22 (upp blue, blue --)

Hope you find my analysis helpful. Thank you for your support !!

Ferro China Research Report

by DMG & Partners (4 July)

JUST about a week or two ago, news was released about the finalisation of iron ore price discussions between Australian miners and Chinese steel mills. Brazilian miners had earlier this year set a 65-71 per cent increase in iron ore prices with Chinese steel mills, which were ignored by the Australian miners, arguing that their proximity to China reduced iron ore shipping costs.

That said, inflation fears among Chinese steelmakers appear to have deepened after they agreed to pay Anglo-Australian miner Rio Tinto up to 96.5 per cent more for their iron ore supplies this year.

This represents the largest ever annual increase and well above the 9.5 per cent increase paid last year. Baosteel then followed by releasing a statement saying that the deal would maintain pricing stability and encourage Rio Tinto's efforts to expand investments and increase production to ensure steady supply.

Such a highly priced new contract for iron ore will likely boost the cost of cars, machinery and other steel-related products.

Margins for giant steelmakers will definitely be maintained or perhaps even expand due to their ability to control prices and pass costs on to their ultimate customers, such as construction companies and car makers. Ferrochina, using hot-rolled steel coils as its raw material input, would appear to get squeezed as well.

However, according to the management, this is how the company has rectified the situation:

The news of the possibility of a 96.5 per cent increase in iron ore supplies from Australia had been floating around for a while, and hence already discounted into prevailing prices in the Chinese market, reducing any shocks.

Throughout the course of its business, Ferrochina has been successfully able to pass on the bulk of any raw material price increases to its customers as it is viewed as a steel processor. The passing on of costs, however, have a lagged effect, as its sales-order cycle is about four months. The selling price of a product is determined at the point of order, using a feedstock price plus a processing fee as its pricing formula. Almost all its products manufactured are backed with a matching order.

Management of Ferrochina has always seen rising steel prices as a threat, and hence started to expand its product offerings a while back, offering a wider range of thickness of galvanised steel gauges and different finishes of galvanising methods.

Management has also improved production efficiency through quicker maintenance works and increased the cold-rolling speeds to help raise utilisation.

We maintain our blended PE of 9; we view the current market weakness as an opportunity to start accumulation.

-Research Report by DMG & Partners (4 July)

Ferro China 030708

After testing the 1.11 support (red --) yesterday, Ferro China finally broke it and even closed right on the downtrend support (low red) today.

The chance of FerroChina hitting the 2008 low of 1.01 has increased, and it will increase even further if Ferro China breaks the 1.05 support (red ...). Looking at the way things are going, it's just a matter of time.



For tomorrow :

Support @ 1.09 (low blue), 1.07 (low red), 1.06 (low pink), 1.05 (red ...), 1.01
Resistance @1.11 (red --), 1.13 (mid red), 1.15 (mid pink), 1.18 (upp blue, light blue --), 1.22 (blue --)

Hope you find my analysis helpful. Thank you for your support !!

Ferro China 010708

Ferro China not only broke the 1.18 support (light blue --), it also broke the long term downtrend support (mid pink). FerroChina is now even more dire than before as it is trading closer and closer to the 1.11 support (red --).

If Ferro China breaks the 1.11 support, as well as the next long term downtrend support (low pink), we could see it testing 1.01 again, which is the low for 2008.



For tomorrow :

Support @ 1.11 (red --), 1.077 (low pink), 1.01
Resistance @ 1.16 (low red), 1.17 (low pink), 1.18 (light blue --), 1.22 (blue --), 1.26 (upp blue, green ...)

Hope you find my analysis helpful. Thank you for your support !!

Ferro China 270608

Another counter that gapped down today and formed the Long Legged Doji. Ferro China broke the 1.26 support (green ...) by opening right on the 1.22 support (blue --).

Going by recent market sentiments, it is very likely FerroChina will continue to trade within the downtrend channel (red), and could also possibly test the 1.18 (light blue --).



For monday :

Support @ 1.22 (blue --), 1.21 (low blue), 1.19 (low red), 1.18 (low pink, light blue --)
Resistance @ 1.237 (mid red), 1.26 (green ...), 1.30 (upp red, blue ...), 1.325 (upp pink)

Hope you find my analysis helpful. Thank you for your support !!

Ferro China 260608

After barely keeping its head above the 1.30 support (blue ...) Ferro China finally broke the support, tested the 1.26 support (green ...) and closed right on the uptrend support (low blue).

If FerroChina breaks the 1.26 support (green ...) tomorrow, we could see it testing the long term downtrend support (low pink).



For tomorrow :

Support @ 1.26 (green ...), 1.23 (low pink), 1.22 (blue --), 1.18 (light blue --), 1.11 (red --)
Resistance @ 1.30 (blue ...), 1.33 (upp pink), 1.34 (pink ...), 1.346 (mid blue), 1.38 (upp blue)

Hope you find my analysis helpful. Thank you for your support !!