With virtually no warning, the iron ore price fell off a cliff in August, plummeting about 30%. It was below US$85 a tonne by early September, compared with almost US$200 a tonne in 2010.
It was due to events in China, where iron ore demand vanished overnight as steelmakers went on a buyer’s strike and liquidated their inventories. This was the first major blow to the iron-ore market since the 2008 financial crisis, and it provided a hint of what a prolonged Chinese slowdown could mean for this sector.
h/t Kevin B
Another side to this story is where are the cries we hear over the Nexen deal about “selling out our resources”? Iron ore isn’t a resource? Where are the cries that it should be made into the finished product on Canadian soil?
KVB, Oh please don’t suggest we make steel in Sydney, Cape Breton. We (Canada) has been there, done that and all that is left are memories of bleeding taxpayer’s dollars.
You know, in spite of access to cheap hydro power(before government greens it, taxes it and makes the usual quotas), the access to raw material and ocean shipping, the costs of making a new steel foundry in Canada is still to prohibitive.
Yeah Sidney, Algoma, Hamilton, Nanticoke are all examples of the futility of Canadian Steel Mills…most long before China was a player. The US “rust belt” appeared decades past as well.
Bottom line was North American Steel had excess capacity after WW2, a reaction to the 1943 steel shortage, but took a while to run down.
My take is that everybody got caught off guard including the Chinese….who now should be logically quietly funding USA Republican PACs.
Despite all the noise about the huge Chinese market/economy, the effects of the US recession/depression is having global effects.
How are ya likin’ that hopey/changey stuff now?
I wouldn’t suggest it, but given the outcry about shipping crude or bitumen out of the country it seems that iron ore might recieve a similar treatment.
KVB at October 1, 2012 2:27 PM
Yeah but the very same elements who protest “shipping crude or bitumen out of the country” do a chimp-out at the prospect of…horrors…building a refinery.
Should we not just give ’em a silly slap, then carry on without listening? …ignoring them don’t seem to work…..
http://www.mining.com/vale-says-iron-ore-will-stay-above-100-as-40-of-chinese-producers-shut-down-93217/
Huh, I thought they would at least touch on the “ghost” inventories that Chinese steel makers were putting up as collateral to borrow against.
There’s more to this Chinese Iron strike than a refusal to buy ore.
I am not sure how Chinese involvement in our economy should be dealt with. Concern about national security should be the primary deteriment. The oil industry does require capital as does other critical industires. I am leaning toward a non-majority share interest with possible guarantees of production.
I should make a speech about this. I have a reputation as an ore rater…