Is iron ore signal or bubble?

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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