Capital Economics is wrong on iron ore (and China)

Tuesday, 1 December 2015

In a note on Friday Capital Economics reassured investors that although iron ore is going to drop below $40 it won’t stay there for very long as supply closes.

Moreover, commodities economist John Kovacs said that with prices approaching big miner breakeven costs and the Samarco debacle, as well as a small rise in demand next year will see the price recover to $55.

Capital Economics is better than most as forecasting but I disagree with this for two reasons.

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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.