NYT: China / Australia - Where Iron Is Bigger Than Gold & Oil

By: TraderMark Sunday, July 12, 2009 9:34 PM

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I don't necessarily agree with the title of the piece, but it's an interesting observation within this New York Times story. For newer readers, let me remind how the Baltic Dry Index (a pricing index for shipping costs which now is seized by investment pundits as one of "the tells on global growth") has been completely dominated by the Chinese and their interest in iron ore. When they are making purchases - the BDI rises, when they are not so interested, it drops. (Feb 9, 2009: China and the Baltic Dry Index - What's Really Going On?) That's how weak global trade is - one country, importing one product (mostly from Brazil and Australia) is causing massive fluctuation in shipping rates.

If you are interested in iron ore as a stock, I've written many pieces on 2 players - Cleveland Cliffs ( ) which is a smaller player in the US, and a major player Brazil ....I think they are on their 3rd name change but now its called Vale ( ) - when I started the blog it was called CVRD ( )

Oil, gold and rice are the commodities that often grab headlines. But for countries like China and Australia, it is the price of iron ore that can determine whether their economies go boom or bust.
For months, China has been locked in an intense, behind-the-scenes dispute over iron ore pricing with the world’s top miners, having refused the price that steel makers in other major countries like Japan and South Korea had already accepted. (May 26, 2009: Rio Tinto (RTP) Agrees to 33% Price Cut for Iron Ore with Japanese Nippon Steel but Chinese Want More) The price haggling is an annual ritual that pits China, now the world’s third-largest economy, against exporting countries like Australia, as each acts in its best national interest.

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