Citi smashes iron ore miners

Tuesday, 11 November 2014

Today’s iron ore equities update comes with added spice after Citi this morning downgraded the entire sector and declared that iron ore is headed into the $50s next year. RIO and BHP are down 1.5% and FMG is down 5% and right on $3:

One cannot overstate the importance of the $3 level for FMG. Terminal support lies at $2.92 and if that breaks then it’s vacant space all the way to the GFC low at $1.80, no matter what Charlie Aitken says.

I submit to you that if $2.92 breaks then markets are signalling that FMG will have to restructure. I personally believe that that is inevitable.

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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.