This is mainly due to two unforeseen events:
the drop in iron ore prices and the sudden collapse of the oil price.
Not exact matches
Resources giant Rio Tinto has reported a 34 per cent
drop in its underlying first half profit to $ US5.2 billion ($ A4.9 billion), with lower
prices for
iron ore and other commodities the main reason fo
Early this week I was with an Australian government representative
in Beijing whom I have known for many years and he told me that
iron ore prices were currently around $ 83 (I think they
dropped another $ 2 last week), and that while some people
in Canberra were reluctant to say it too loudly, he and others were increasingly
in agreement with my lower forecast of less than $ 50 well before the end of the decade,
in part because supply has come off much more slowly than predicted, but mainly because they now recognize that China's rebalancing was indeed going to be a far bigger deal for Chinese demand than sell - side research had predicted.
I expected that the shift
in demand for
iron ore generated by rebalancing would cause
iron ore prices within 3 - 4 years to
drop by over 50 % from their then - current levels of around $ 180 - 90 a ton.
Since the
price of
iron ore dropped to a low of less than $ US90 a tonne last September,
prices rebounded strongly reaching a level of around $ US150 a tonne earlier this week, albeit
in an environment of continuing volatility.»