Economist and Hedge Fund Manager Shayne Heffernan of takes a look at Iron Ore and China.

Iron Ore has been a bumpy ride over the last few years, 2011 iron ore prices that averaged more than $US150 a tonne and peaked at more than $US180 a tonne.

This year they moved to $US130 a tonne, and then scared the mining world when they went below $US90 a tonne at the end of August.

In 2013 we expect to see $160 as they high and $140 as the average.

The flood of freshly printed money from Japan, Europe and the USA will end up in Asia, Asia will grow at a record rate and Iron Ore prices will follow.

Talk of the Iron Ore boom as being dead is a little premature, it is my opinion that the pricing is reflective of China buying, not China demand. As the chart below indicates it seems buying from China comes in waves, the price rises and China builds stockpiles, the stockpiles are used, China starts buying again and the wave returns.

To me it looks like we are approaching that point now. You will need to double click the chart to see the full screen image. What you will see is a broad channel that is consistently making it’s way higher.

Iron Ore Live Trading News Macro Charts

While Europe and the US struggle in economic terms, ASEAN + 6 is about to become the world’s largest trade bloc, not sometime in the future, some time in the next year. This is where demand for Iron Ore will come from, and prices will rise.

Australia, despite the efforts of Wayne Swan etc, is well placed to be a big winner in the Iron Ore business, proximity, quantity and quality are all on Australia’s side.

Who knows, maybe Twiggy will make enough money to finally pay back his old 5/8.

Shayne Heffernan Ph.D.
Economist/Hedge Fund Manager

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals. He is also an active consultant working with Corporations around the World.

He is recognized as one of the leading Economists in South East Asia, as well as the preeminent authority on ASEAN. His opinions and forecasts are widely read by decision makers in the region and Internationally.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reached a peak of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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