Fortescue’s problem is getting bigger

Friday, 26 May 2017

As I reported earlier today, benchmark iron ore settled at $58.80 per tonne. 58% iron ore is today at $38.99. That means the discount is approaching 34% and FMG’s breakeven price is pushing north of $45, according to UBS:

Moreover, SGX futures have worsened as well, steepening the 58% discount arbitrage:

Rendering FMG insolvent within 18 months.

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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.