A big and bloody Pilbara wet builds

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Some years ago I described what was coming in the iron ore market as “blood flowing through the gullies of the Pilbara”. We’re still a long way from that but the first trickles are beginning to run. The Twiggy Forrest’s outburst two days ago calling for a iron ore cartel has generated fantastic quote after quote from industry insiders. It began thus:

At a business dinner in Shanghai on Tuesday night, Mr Forrest, founder of the fourth biggest iron ore exporter, Fortescue Metals Group, said he was “absolutely happy to cap my production right now” at 180 million tonnes.

He said the other major players, Rio Tinto, BHP Billiton and Brazil’s Vale should also cap their production “and we’ll find the iron ore price goes straight back up to US$70, US$80, US$90.”

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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.