Death has come for iron ore miners!

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Iron ore miners finally showed more material weakness yesterday, despite the rampant cheer leading at Gina’s AFR. BC Iron was crushed 6% as its necrophiliac dream of absorbing Kerry Stokes’ Iron Ore Holdings evaporates, given it is dependent upon iron ore prices not falling below $90 for twenty days and we’re at eight and counting. While any deal might be renegotiated in BC’s favour, markets appear to be waking in fright to the reality that the suitor’s own casket is itself being lowered smoothly into the grave.

Fortescue also fell 2.5% to $4 and is only 4 cents above its 2014 low. It released a statement late in the day confessing that it had shipped an astonishing 15 million tonnes (mt) in August, an annual run rate of 180mt, miles above nameplate capacity. I’ve been unable to determine if it was after the close but I assume so given prices fell right to the bell. Presumably the market will like the news, even though it only adds to the longer term disaster.

Other fatalities continue to mount. Cliffs has appointed a bunch of investment banks to sell its WA iron ore assets. It’s a tidy group of mines at 12mtpa but with a break even cost around $100 but will only interest those that specialise in digging up cadavers.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.