One for the Aussie $ traders.

  • From the Wall Street Journal last night saying investors are cutting their exposure to iron ore “as the industry faces a flood of new supply that has pushed prices … close to two-year lows.”
  • With all the new supply coming on line concerns are that sharp bounce-backs in prices seen in the past after selloffs will no longer occur (I guess it really is different this time, then?)

“In previous years we have seen a sharp selloff followed by a sharp rebound,” said Neil Gregson, a fund manager at J.P. Morgan Asset Management overseeing about US$3.5 billion in natural-resources investments. “This time we don’t think there will be that sharp rebound.”

  • Gregson expects iron-ore prices to move in a US$10-band either side of current levels
  • Deutsche Bank and Commonwealth Bank of Australia have slashed their forecasts for iron-ore prices
  • Morgan Stanley has lowered its price estimates by 21% in each of the next two years, to US$90 a ton in 2015 and US$87 a ton in 2016, saying it had underestimated the speed at which new mines were starting up
  • UBS predicts the seaborne market will be awash with almost 74 million tons of surplus iron ore this year. By 2016, the seaborne market could be oversupplied by 267 million tons—or as much as Rio Tinto, the world’s No. 2 iron-ore exporter, produced last year

More at: Investors Fret Over Flood of Iron Ore
Resources Companies Are Investing in New Iron-Ore Mines to Meet Asia’s Appetite

Meanwhile the AUD has ticked a little higher in the very early Asian going, above 0.9400 and just sitting a few ticks higher than there at present. Check out the daily chart – rangebound since April. When will it break?

I’ll be back with orders and levels as the Sydney morning gets more active