All I want to do is go home but this can’t wait. Finally, I’ve been out-beared on iron ore, from Bloomie:
Iron ore will slump into the $US30s-a-tonne range this year as low-cost supplies rise and steel demand in China shrinks, according to Andy Xie, a Shanghai-based independent economist who’s forecast a rout for years.
“When it peaked at $US190, I started talking about a collapse and nobody believed me,” said Mr Xie, a former Asia-Pacific chief economist at Morgan Stanley. “We need to see prices much, much lower. It can still go down through $US40 before we bounce back.”
The raw material used to make steel will probably average $US50 this year, a level that he’s predicted since 2012, said Mr Xie, who’s tracked the Chinese economy for more than two decades. Prices need to decline to a level that’s so painful higher-cost Chinese mines will be forced to give up, he said.
“We have a situation of declining demand and increasing supply,” said Mr Xie, who also worked for the World Bank. “Domestic steel demand in China is actually declining and that trend is going to last a long time.”
I see that next year but you never know with these things. But I promise you this, if $35 does come in the next 18 months, that is the end of the great Australian housing bubble.
And with that I bid you a good weekend. Not even a comet falling serendipitously upon Canberra would have me post again today.
