And the current damage to iron ore profits is...

From UBS, which uses an $85 baseline forecast for iron ore in 2015 comes the latest updates on the profits misses versus target:

Diversifieds: All else remaining equal, our BHP & RIO earnings estimates for CY 15 would be -16% and -5% respectively under a spot scenario. Nevertheless, RIO would trade on cheaper spot multiples at 11.6x CY 15E PE vs BHP at 14.5x CY 15E. Iron ore: The spot iron ore price is 6% below our CY 15 forecast, and implies a 49% downgrade to FMG’s FY 15E earnings and -108% to AGO.

In short, markets have not priced $79, let alone Dalian’s $67. It’s amazing to see the sell side control the market up close.

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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.

And the current damage to iron ore profits is…