The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Friday, August 31, 2012

Why are iron ore prices falling?

UBS answers the question of the day:

- typical Q3 trade weakness (just beyond the peak in Asia’s steel production rates + peak in sales for steel-bearing goods) is being enhanced by a genuine lack of trade-confidence: steel mills of China are uncertain about central govt support for steel-intensive sectors of infrastructure & housing (China Tour Feedback, Lawcock, 31-Jul-12).

- the recent, more rapid downward price move probably reflects an emerging buyers’ strike (also, producers/traders are being frustrated by China's steel mills failing to honour contracts).

- current market conditions resemble those of Oct-11, when prices corrected 30%; back then, we had a buyers’ strike + Major producers were encouraging customers to abandon contract pricing & take up spot/monthly terms.