Where does all of that iron ore go?

ANZ has produced a useful note on the outlook for iron ore. Regular readers will recognise plenty of conventional wisdom at work here, with the basic argument being that ongoing modest growth in Chinese demand and the cost curve for supply will support prices in the $120 to $160 range.

That’s fair enough if more bullish than I’d be, but what caught my eye was the above chart on the sectoral breakup of iron usage in China – including 39% of consumption being real estate – as well as some interesting anecdotes on iron ore hoarding.

Neither of these made me terribly comfortable but see for yourself.

China Iron Ore May12 (2)

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.