Fairytales in the Tele: On the topic of iron ore, today’s front page story/page 2 story based on a column written by Fortescue boss, Andrew Forrest underlines how the Murdoch clan’s Sydney Daily Telegraph just doesn’t understand business — period — except when it’s a whinge from a billionaire feeling hard done by. This morning’s page-1 story entitled “Ore War” and claimed to be exclusive, quoted Forrest as accusing BHP and Rio Tinto of “killing the economy”. He repeated his tiresome claim that BHP and Rio are driving down the price of iron ore to push competitors out and “in the process punching a big hole in the budget and threatening Australia’s prosperity”. Next the Tele will find that BHP and Rio won’t help little old ladies across streets, or refuse to kowtow to a publication owned by billionaire media clan, the Murdochs.
What the Tele and Forrest don’t admit is that Forrest is pushing for the survival of his own business, at the expense of Rio and BHP. Forrest is claiming that Fortescue has a right to survive that’s exclusive to him and not smaller competitors such as Atlas Iron or BC Iron. The Tele and Forrest also ignore the fact that Fortescue has added more capacity to the global iron ore market in the past five years than anyone else — its 155 million tonnes (quietly boosted to 165 million earlier this year, while moaning about overproduction by his rivals) is the single largest boost to production from any single company around the world. And a extra third of that is coming from fellow billionaire Gina Rinehart, whose 55 million-tonne-a-year WA mine, Roy Hill, will start shipping ore later in the year. That extra production will weigh down prices later this year and in early 2016 more than anything BHP and Rio does. Note that Forrest is not offering to cut its production. Her mine and its extra tonnage have been conspicuously absent from Forrest’s rants (and those in the Tele and from the WA government and Premier Colin Barnett). If Rinehart is free to start her big mine, and Forrest thinks he is entitled to remain in business, why are BHP and Rio being attacked for doing just that — remaining in business and selling their products?
Like all rent-seekers, Forrest thinks there should be one rule for him (to allow him to remain in business) and another for chosen rivals (BHP and Rio Tinto) who are fierce competitors. No wonder the Tele believes him. It’s just the Murdoch style of thinking. One rule for our print media near-monopoly and another for every other local media company and other non-media companies. For the Tele and Forrest, it’s another case of “Do what we say, not what we do”. Where’s the support for free enterprise when you want it? — Glenn Dyer
Don’t budget on iron ore. Global iron ore prices seem to be tantalising Treasurer Joe Hockey and the team at UBS, sorry, at Federal Treasury. Tomorrow night’s budget is likely to be based on a conservative forecast for iron ore over the next year, with talk the magic number could be under US$50 a tonne (that’s after setting forecast prices too high in last year’s budget and mid year statement). On Friday night, the major measures of global iron ore prices snuck further over US$61 a tonne. According to the Steel Index, iron ore prices rose 0.8% to US$60.50 a tonne on Friday, the highest level in five weeks. The Metal Bulletin Index price rose by more than US$61.40 a tonne. And the rebound in prices created a stronger rise for lower grade ore — so-called fines (less than 62% iron content) with the Metal Bulletin price jumping 2.8% US$53.89 on Friday, the highest since the end of January. And figures out on Friday showed China’s iron ore imports fell 0.4% from March to total a still high 80.2 million tonnes in April. That was down 3.8% from a year ago. Imports for the first four months were 307 million tonnes compared with 305 million tonnes in the same period in 2014. No growth at all in demand for our most important export, so it’s not being too conservative by setting a conservative price estimate in the budget. — Glenn Dyer
Rate rise looms (again). No, not Australia, the US, where it’s the latest tip from America’s pet-shop galahs as to when the Fed will start lifting rates after the solid jobs report for April, when 223,000 new jobs were created and the unemployment rate edged down from 5.5% to 5.4%. That’s the lowest the US jobless rate has been since mid-2008, before Lehman Brothers collapsed and the GFC erupted. US economists said the rebound in April from March’s low report came too late for a Fed rate rise in June — now the September meeting looms as the best bet. But, a note of caution, the weak initial March report of 126,000 new jobs was cut to just 85,000 in the first revision by US statisticians. That has raised an amber light in the minds of some economists about the real health of the US jobs market. While the 223,000 new jobs was a solid figure, the outstanding job creation surge at the end of 2014 led to monthly readings well in excess of that. — Glenn Dyer