Iron Billionaire Attacks ‘Market Vandalism’
World Economy

Iron Billionaire Attacks ‘Market Vandalism’

Iron ore prices collapsed this year as the biggest miners committed market vandalism by overproducing, according to Fortescue Metals Group Ltd. Rio Tinto Group fired a salvo in response, saying the analysis is overblown.
“The logic that you keep expanding just because you can squeeze an extra ton out of your machines, applies well to mining juniors,” Chairman Andrew Forrest said in a commentary on Monday as the company reported a slump in full-year profit. But it “is market vandalism and self-harm when industry leaders do it,” he said, without identifying any companies, Bloomberg reported.
Iron ore sank last month to the lowest in at least six years as Rio Tinto and BHP Billiton Ltd. in Australia and Brazil’s Vale SA boosted cheap supply, betting higher volumes would offset lower prices. Fortescue will hold volumes steady this year, although it was ready to expand if demand revived, according to Forrest. Rio said Monday that Forrest’s remarks about the market were inconsistent, while BHP declined comment.
“Iron ore is inelastic in demand,” Forrest said using a term that suggests consumption doesn’t change with price. Once users’ demand has been met, “any further product offering will see the price collapse. We have seen that this year.”
Ore with 62% content slumped 21% this year to $56.10 a dry metric ton on Friday, according to Metal Bulletin Ltd., as demand growth stalled in China, the largest buyer. The commodity bottomed at $44.59 on July 8, a record in data going back to May 2009. Prices may lose a further 30% over the next 18 months, according to Goldman Sachs Group Inc.

 Above and Beyond
Fortescue’s “claims about the global iron ore market have been consistently overblown and inconsistent,” Rio said in a statement in response to Forrest’s comments. The miner “has attacked its competitors for increasing production while ramping up output above and beyond all other Pilbara producers.”
Iron ore has retreated this year in line with raw materials from crude oil to copper amid concern that China’s slowdown will undermine demand, spurring gluts. The Bloomberg Commodity Index sank on Monday to the lowest level in 16 years.
Fortescue reported net income plunged 88% in the year to June 30, missing the average of 12 analysts’ estimates compiled by Bloomberg. Australia’s third-largest exporter raised shipments from its Pilbara mines to 165 million tons in the last year from 28 million tons in 2009.

Short URL : https://goo.gl/2KzOxH
  1. https://goo.gl/Hz6QNC
  • https://goo.gl/VeEgzE
  • https://goo.gl/jE2Bmy
  • https://goo.gl/DcLPzX
  • https://goo.gl/7y2i1V

You can also read ...

French Foreign Minister Jean-Yves Le Drian addresses CEDRE Conference in Paris on April 6, with Lebanese Prime Minister Saad Hariri on his right.
With the FIFA World Cup over and French victory secured,...
Handout picture shows IMF Managing Director Christine Lagarde on a screen as she speaks  during the G20 meeting taking place in Buenos Aires, on July 21.
The International Monetary Fund warned world economic leaders...
Dubai’s new business licenses in the second quarter of 2018 were down 26% from the same period in 2016.
In Dubai’s posh Jumeirah Beach residence district, luxury...
Australia  Faces Massive Economic Crash
Australia is facing an economic shock akin the global...
Germany Lifts Turkey Sanctions
Germany has lifted economic sanctions on Turkey and relaxed...
IFC to Inject $2 Billion in Egypt’s Private Sector
International Finance Corporation, a member of the World Bank...
Algeria Trade Deficit Sharply Down
Algeria’s trade deficit declined by 83.6% to $490 million...
According to a survey, 75.3% are facing difficulties in running their businesses this year.
South Korea’s major business lobby said Sunday it will file an...