Iron Ore in free fall - Perth property next!
- Thread starter grubar30
- Start date
didn't crash? perhaps in Melbourne.... over in the west it got slammed up to 50%. It's this shake out that has formed a solid base from here on.
Iron Ore taking a hammering the last few days:
http://www.macrobusiness.com.au/2013/03/daily-iron-ore-price-update-ouch/
http://www.macrobusiness.com.au/2013/03/daily-iron-ore-price-update-ouch/
This thread is like an Iron Ore Trading thread rather than about property market economics
This thread is like an Iron Ore Trading thread rather than about property market economics
There is a relationship to property.
China tightens property restrictions, causing steel to slump and iron ore prices to follow.
+ iron ore is a major part of Australia's exports and economy. So lower prices = less jobs, lower sentiment, less money to bid up houses.
and less royalties to foreign shareholders. if the companies remain profitable they will need employees. that's if we had a free fall in prices.
not really - agri is our biggest by volume and value.
Sorry Aaron - from the RBA:
Another interesting graph I thought I'd post just for kicks:
Kinda shows where our jobs really are - even allowing for a significant slab of service industry jobs resulting from the mining industry still shows plenty of other industries are just as important for the Australian economy.
Another interesting graph I thought I'd post just for kicks:
Kinda shows where our jobs really are - even allowing for a significant slab of service industry jobs resulting from the mining industry still shows plenty of other industries are just as important for the Australian economy.
Just to clarify the effect of iron ore exports in particular compared to agriculture exports:
- Lately (2010-2013) the value of agricultural exports has hovered in the low $30bn range per annum.
- The equivalent value of iron ore exports in the same period has hovered in the $50bn - $60bn range per annum.
- Lately (2010-2013) the value of agricultural exports has hovered in the low $30bn range per annum.
- The equivalent value of iron ore exports in the same period has hovered in the $50bn - $60bn range per annum.
Of course the only reason that most people in Australia can and do work in services and give Australia it's fantastic standard of living is because just 2% of the workforce are miners and generate over 50% of our exports. And 3% of the workforce are farmers and can feed everyone and send even more overseas and generate 13% of our exports.
It's pretty obvious I'd have thought that once a nations basic needs are catered for, as in primary and secondary industries, every one else not involved in either, are going to be working in service industries.
The simple fact is that the more efficient and productive primary and secondary industries, the less people they employ, and so the more people MUST work in service industries. This must be the case, as if you aren't a miner or farmer or work in a factory manufacturing stuff, you must work in services. And as all primary and secondary industries get ever more efficient and get ever more mechanised, the number of people working in services will continue to increase as a percentage, as will the standard of living enjoyed by those people.
And last time I looked it up, even though service industry exports are pretty big, service industry imports are even bigger. So is services really an export industry if we import more than we export? It's like saying Australia is a car exporter when we export 900 vehicles and import 500,000. Or saying Australia is a food importing nation when we export $30 billion worth of goods and import just a few billion.
See ya's.
Last edited:
my point was agri commodities make up more than metals commodities, bit i am shocked at the difference in value...i thought it was much more!
Another interesting graph I thought I'd post just for kicks:
Kinda shows where our jobs really are - even allowing for a significant slab of service industry jobs resulting from the mining industry still shows plenty of other industries are just as important for the Australian economy.
This graph is fairly inaccurate with regard to resource sector jobs. The old belief was that around 1.8% where involved in resources. The latest data from census stats shows quite a different picture.
WA property and to a wider extent Australia has a couple of known hurdles to cross in the coming months. It's been well forecast that resource construction spending will literally fall off a cliff come 2014 as major projects wind down. That appears to be happening faster than expected. There was hope that several proposed mega projects would fall into place immediately behind this current crop and therefore buffer the slowdown. That now seems to be unlikely if ever.
What most don't realise is that WA as of last count provides approximately 53% of AU's ToT and around 75% of WA's GSP. You don't need to be a rocket scientist to get the drift that any slow down in resources is effectively a double whammy. Not only will construction contract abruptly but a decline in resource export volumes coupled with significant price falls literally smashes our ToT nationally and starves the treasuries of significant royalties, duties, taxes and eventually GST revenues.
It's absolutely staggering to see the turn around in the tune being sung by the big resource company CEO's from just 12 months ago. China had 2 more decades of gangbuster growth left in it. Those guys have lost their jobs and now it's batten down the hatches. Rio's future forecast for ore prices are nothing more than a fervent prayer with little evidence to support it.
While many watch iron ore the real story is China's huge financial problems coupled with Japan's apparent desire to commit economic suicide. Right behind them is South Korea. All 3 are disasters for Australia. Combined they soak up around 48% of AU exports
If there's any upside in the next few years I'd like to know where it is because as things stand now given the global toxic debt burden and dysfunctional global economies I have little hope things will turn out well over the next decade for those not paying attention.
that's a great post, but it misses the "powers' that be" ability to maintain the status quo.
Yes the great myth. Krugman also believes in this myth.
Iceland ... poof!
Portugal ... poof!
Ireland ... poof!
Greece ... poof
Spain ... poof!
Cyprus ... poof
Argentina ... poof
Belgium ... poof
Italy ... going going ...
France ... going going ...
UK ... going going ...
Japan ... going going ...
Sth Korea ... going going ...
China ... going going ...
USA ... going going ...
History repeatedly reminds us that the ability for any entity to maintain the status quo is finite.
The challenge for Australia is how we manage this. The ostrich strategy is not highly recommended. Cognitive dissonance while comforting to some does little to protect ones assets against a downturn. Labeling those with a negative outlook may feel empowering to some but does nothing to add understanding to a discussion nor progress those with little understanding on how they might cope with life's inevitable dramas.
There is opportunity in adversity it is said. But first one must acknowledge that adversity is or may arrive in the near future and plan accordingly.
Not quite. As someone who works in the construction Industry and gets paid way too much I should be one who is most worried, however I am not. The Business development boys where I work have been flatout since Christmas with the big boys. Things are happening!
Behind closed doors the mega projects are moving again, the capital is flowing and the major expansion plans are back on (rio, bhp, and fmg).
Chevron are looking at plans to take gorgon out to 8 trains which will be in construction till about 2020.Then there is Wheatstone, Browse and Ichtys (NT but heavily WA resourced).
There are also numerous projects on hold that will fire up when the heat in the labor market cools down, this will ensure maximum capacity in construction industry for the next decade.
Fear less
