Is iron ore signal or bubble?

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The FT has an interesting debate on it:

The price of iron ore has surged 60 per cent to above $115 a tonne so far this year, according to S&P Global Platts…But it also runs the risk of attracting fresh supply and bringing this year’s rally to an abrupt end.

“The market is telling us we need alternatives,” said Graeme Train, senior economist at Trafigura, one of the world’s biggest commodity traders. “What you are seeing in the price now is this risk premium for a commodity that has become regionally constrained. There is so much supply coming from two countries [Australia and Brazil] and very little from anywhere else.”

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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.