Why has iron ore boomed and why is it doomed?


The one person I would never ask is a vested interest. But, given media has no brain of its own these days, that’s what the AFR did:

To solve the mystery of strong iron ore prices, Detective Chanticleer turned to Huw McKay, BHP’s chief economist, who is based in Singapore.

His answer was deceptively simple: iron ore prices are high because Chinese steel mills have been producing at a record annualised rate of about 1.08 billion tonnes, despite the weakness in the residential property sector and despite the fact that steel mills are running at losses.

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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.