Yesterday Rio Tinto (RIO) announced its plans to cut jobs all over, excluding their iron division (BHP was not so kind earlier in the day) but you wouldn’t know it from action in the iron ore price, which, to put it mildly, blasted off:
Here are the charts:
And steel:
If there is another country on earth that has this great a volatility in its it primary export and no fiscal mechanisms to counter-balance it, I don’t know of it. Chile, Norway and Saudi Arabia may have greater singular reliance’s but they’ve also got ways to contain them.
We, on the other hand, ride the wild ore! $120 retest imminent.
So if we do see real Chinese stimulus in 2013 then IO at a much higher level.
Well…yes…but we knew that already. Much of this is the restocking impulse. Things will calm down soon enough.
Trend remains down.
Agree keeping in mind Pettis’s three questions he raised on China.
A top set of recent calls on this H, David. Perhaps because economic fundamentals do still have a place in that market; unlike the other H.
Thanks Janet.
‘We, on the other hand, ride the wild ore!’
The thrill, the excitement, the anticipation, the gamble – we love it all.
Here you go: http://www.problemgambling.gov.au/
Thanks mate, but I’ve always been one for the highs and lows! My caring nature compels me – one for the usual suspects: http://www.anxietyonline.org.au/
When was the last time you experienced a low?! The price of ore rose ten times in the latter half of the noughties. I can’t imagine you’ve experienced many dark periods recently!
Very true
However I also try to adopt a Daoist mindset to much which is beyond control.
It must be hell. What’s it like being one of God’s chosen people? (or should that be one of the Chinese Communist Party’s chosen people)
It must be tough being paid to come here and gloat.
Gloat! I was pleased to see you make a factual comment – one I agreed with. Settle, petal.
If there is another country on earth that has this great a volatility in its it primary export and no fiscal mechanisms to counter-balance it
Well no, but we’ve been told for years now (and repeated a few days ago by Parko) that our export prices are on a permanently high plateau. So with that kind of thinking at the very highest level, no wonder we haven’t prepared for volatility.
Im concerned speculation is at play from the chinese holiday week. We need more data. This smells of speculative play and a possible pile in of shorts soon.
Anyone get my questions on yesterdays post? Can someone at macrobusiness set me right. I hope I’m a fool and iron ore is correcting but…..?
Can we call the dip a warning shot?
Har har me hartys.
The volitility in the ore price is interesting in itself.
When we look back over the long term, the picture is one of relentless – almost monotonous – stability.
The wild ride that we are seeing currently appears to be something new and without obvious precedent.
BHP were behind the relatively recent push to short term contracts and greater importance of the spot price… I guess it seemed like a good idea when the price only ever went up.
That volatility also makes trading the Aussie particularly irksome. Just when you think critical support is on the verge of getting taken out… 12% blast-off for IO.
It’s a glore-ious business.