Ironing out the wrinkles in iron ore supply and demand

Tue, 11 Mar 2014  |  

The price of iron ore was has been smashed in recent days with it dropping to US$104.70 a tonne yesterday.

The price is some 25 per cent down on the start of the year. It is a big fall for sure but just how worrying is it?

Well, the price of iron ore is, in USD terms, still 550 per cent higher than in 2004; it is 210 per cent higher than at the end of 2006 and over 70 per cent higher that the level in the middle of 2008.

These are pretty spectacular gains in themselves, but all the more so when one considers the fact that the volume of exports of the stuff has increased by over 300 per cent in the past decade and is still rising.

Now compared with the peak in early 2011, the price of iron ore is down over 40 per cent, but is up 16 per cent from the dip in late 2012 year is down over 30 per cent from the level in early 2013. It is easy to make a nice headline picking a peak level and comparing it with the price now.

For me, the longer run trends are important and the price is still high.

To be sure, it would be a concern if iron ore prices fell to US$70 a tonne or less as this would hurt many of the high cost producers and the economy. But that seems unlikely that prices will fall this low on any sustainable basis as China is still growing at 7.5 per cent, the global economy is looking stronger by the week and as we keep hearing from the mining investment collapse, new capacity to produce more of the stuff is not being increased.

comments powered by Disqus

THE LATEST FROM THE KOUK

CLIMBING THE COVID MOUNTAIN

Wed, 29 Jul 2020

TEN ECONOMIC STEPS THAT FORM A PATHWAY TO THE TOP

THEKOUK and EVERALDATLARGE OUTLINE A WAY FOR THE PEOPLE OF AUSTRALIA TO CREATE AND MAINTAIN SUSTAINED PROSPERITY

Covid19 has opened a door for Australians to positively accept significant changes that will lead to a shared good. This rare opportunity enables us to achieve sustainable economic and social goals that create a new ‘normal’ as our way of life.

These Ten Steps are presented as non-partisan recommendations to the Australian Parliament in the firm belief that, if they embrace them, the Australian economy and society will be greatly enhanced after the Covid19 pandemic has passed.

*A job for you if you want one.
A significant increase in part time and casual employment can be created that will enable you to enjoy a more creative and peaceful lifestyle and to live longer and better. The traditional age at which you would have been expected to retire will become obsolete as a result. An access age for pension and superannuation will become your choice. This will enable you to remain in paid work for as long as you want to, on a basis that you choose, while boosting the productivity and growth of Australia.

*You will get wage increases that will be greater than your cost of living.
A demand for enhanced innovative skills at all levels of employment will be created as the economy grows in strength, thereby enhancing your stature in the workforce and enabling executive salaries and bonuses to drop to levels that are accepted as justifiable by employees, shareholders and customers.

The misplaced objective of the government of delivering a surplus, come hell or high water, has gone up in smoke

Tue, 07 Jan 2020

This article first appeared on the Yahoo Finance web site at this link: https://au.finance.yahoo.com/news/the-governments-test-in-2020-220310427.html   

---------------------------- 

The misplaced objective of the government of delivering a surplus, come hell or high water, has gone up in smoke

For many people, the cost of the fires is immeasurable. 

Or irrelevant. 

They have lost loved ones, precious possessions, businesses and dreams and for these people, what lies ahead is bleak.

Life has changed forever.

As the fires continue to ravage through huge tracts of land, destroying yet more houses, more property, incinerating livestock herds, hundreds of millions of wildlife, birds and burning millions of hectares of forests, it is important to think about the plans for what lies ahead.

The rebuilding task will be huge.

Several thousands of houses, commercial buildings and infrastructure will require billions of dollars and thousands of workers to rebuild. Then there are the furniture and fittings for these buildings – carpets, fridges, washing machines, clothes, lounges, dining tables, TVs and the like will be purchased to restock.

Then there are the thousands of cars and other machinery and equipment that will need to be replaced.