The abyss opens under Fortescue

We will surely see a break in terminal support today for Fortescue Metal’s Group. After yesterday’s hammering to a close of $2.97, two cents below the post GFC closing low, today we will rupture the terminal support line at $2.92:

The next support is at $1.80. If get there, or anywhere near it, my view is that markets will be signalling a restructuring ahead for the new force in iron ore, and on that front the stress is also showing in the company’s 2018 maturity debt. In the past month its bond prices have fallen sharply:

And over the longer term are approaching levels last seen in 2012, prior to its deleveraging when its circumstances were broadly thought to be life threatening:

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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.