From the SMH:
Pacific Investment Management Co trimmed bets on declines in the Australian dollar, predicting iron ore prices have reached a bottom.
…”To get a true rebalancing you don’t only need Aussie dollar weakness, but you need weakness followed by a period of stability,” Mead said in an interview in Sydney on February 20. “If we do stay in the mid-70s for six months, then the back end of this year will probably start to look a bit better in relation to corporate investment and that cycle that we’ve all been waiting for could start to kick in.”
“The Aussie will fall a little further, so we’re still short the Aussie dollar,” Mead said, referring to bets on losses. “We’ve trimmed that short back from where we were in the fourth quarter.”
,,,”Looking at the supply-demand dynamics for iron ore, we think that the $US60-$US70 a ton range is quite sticky,” Mead said. “At $US60 enough mines are under pressure and require being shut down. At $US70 supply can come back on stream.”
Some high-powered support for the Kouk’s bottom call. If iron ore has bottomed then it’s a quite reasonable position. I just don’t think that it has. The iron ore surplus will triple by this time next year and there is no signs of anything more substantial than growth stabilisation coming from China.
