investorpolitico

Big drop of iron ore – touching the USD 91.80.

It is a combination of China slowing down (in real term, not the news), Chinese property slowdown, and de-stocking.

The target is the last minimum or even lower, so between USD$85 and USD$75.

And unless we have again another big Chinese stimulus, last time recovery towards the end of year will be more muted with a target of USD$90- USD$95 as China enters in a new economic phase. This scenario is good unless we have a serious crash in China.

The great fall last Friday was caused by some new rules (more stringent) in regards to margin loan on iron spot. So this week the situation should ease.

As usual the Australian Government missed the target completely. The estimates were on USD $110

Iron Ore plunged under USD100 (AUD 98.50).

This is the consequence of the ongoing crisis (well nobody says crisis and China in the same sentence, apart me) in China and it will put pressure both in Australia and China.

Australia is quite logical ….half of our sharemarket is iron ore.

China is more subtle …yes they depend a lot from iron ore – but in more ways than one as a lot of loans are secured by commodities (as in Australia are secured by houses).

So China is racketing up the scaremongering with Vietnam (The Epoch Times signals even troop movement at the Chinese Vietnam border, apart the naval issues).

Probably it will use the usual technique to build up pressure, until the US Navy gets really interested and then “go away” to find another conflict spot (it is pretty much the pattern they used in the last three years).

In reality is mainly for internal purpose (the classic strategy: when there are too many domestic economic issues, create a scaremongering monster outside).