Mining and Heavy Industries

Investment guru questions iron ore market fundamentals

Templeton Emerging Markets Group executive Mark Mobius has reportedly called for an end to the connections drawn between demand for iron ore and the market price.

Quoted in the AFR this week, Mobius said the demand and supply market for steel in China was stable, and that commodity price fluctuations were more often influenced by other market factors, than by supply-demand fundamentals.

“We’ve got to separate these two things,” he was quoted as saying.

“Supply-demand is one thing, price is another thing. Because the price is subject to all kinds of external factors, and the traders who are betting on the price going up or down or so forth.”

Mobius is reportedly confident that steel demand – the real, solid factor determining the long term viability of iron ore – will remain strong in the long term.

“I don’t see a big, big decline in the demand for iron ore going forward,” he was quoted as saying.

“I think there’ll be a continuing demand not only in China, but other parts of the world. If you look at Chinese imports of iron ore, it’s almost a straight line, continuing to go up, [while the price] is going all over the place”.

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