Iron ore leaps 7.3pc to more than $US176 a tonne

Source AFR.

Wow, who would have guessed iron ore prices this high in 2020.

Just imagine if Australian government introduced export permit limitations on iron ore exports just to send message to China that they don’t hold all the cards. Price would shot through the roof.

But I don’t think our government would do that at this point. Things would need to get really bad for us to use our one and only trump card against them. Because once we use it there is no turning back on our relations with them.

Cheers
Oracle

 

I would like to think that the companies themselves are dialing back production a little to inflate the price and squeeze China a little. I have no evidence they are doing that, just wishful thinking.

 

A virus shutdowns many iron ore mines. A few keep producing. Supply and demand and price goes up. China is not happy with the price. Ironic really

 

Also big China infrastructure programs has spiked demand and Chinese steel producers/market are scared that the CCP may impose tariffs on Australian Iron Ore (I believe unlikely as shooting themselves in the foot) so demand even more.
(Source article I believe was in the China thread).

 

In some ways China already has put it into the no turning back on our relationships category, what country would commit cyber crimes, local Chinese media manipulation, bully boys tactics etc etc against a country they respect and want to be friendly with!

With each act of agression we hold back and make politically weak responses.....take them to international arbitration...years of wasted money and then they will decide in our favour but China will ignore the ruling, and our own government knows this but still plays this stupid game.......

 

The problem is what can we do to really hurt them but in the process not hurt us even more?

Once our economy suffers because we limit iron ore exports what chance the government has to get re-elected? Its a political suicide.

The only winning solution for us is to bite the bullet of Chinese aggression while we look to diversify our export market. China cannot hurt us much if our export markets are well diversified. Unfortunately this will take time and there is no way around it.

Cheers
Oracle

 

Agree 100% @oracle, it took time to get us into this unfortunate situation and it will take time to get us out. There will be pain but if we don't start now on the path of diversification we are giving away any chance of independance we have for our future generations.
We have been biting the bullet of Chinese aggresion for years now so the timeline of change has to be sped up and the bitter medicine needs to be taken sooner rather than later.

 

I really don't think we should bet on Iron Ore saving the economy. Because:
a) Current prices are a result of thousands of deaths in South America due to COVID and there will in some way be relief eventually. Even if that means great expenditure on automation from Vale. Ore comes out of the ground good to go from Aus, we don't do anything special with it, there is no technology unique to BHP or Rio. Nobody calls either of them the 'smart Australian'.
b) In WA there is not actually any refinement at all - its almost 70% Fe in the Pilbara. But with the massive margins in it, there will for sure be business cases around the world suggesting a good ROI with refinement. At extreme prices, which have persisted for a while, it won't be too much longer before additional production comes on line around the world. It takes about 10 years to get a mine going to production and shipping, we aren't too far away from that now.
c) Current prices are driven by Chinese mills competing with each other. China has a centrally managed economy. That one could hit us near immediately. What would we do, refuse to sell it? We cant. BHP and Rio will always put profit first, they are not strategic tools.

We would be much better off doing something with the ore. We should have started a long time ago. Australia exports commodities only. Its not a safe place to be.

The lucky country is in fact the arsey country (where the term comes from). Things are not looking so rosy for the next generation.