JPMorgan has released a bullish note on the iron ore price, providing a raft of factors in support of its conclusion. The note found that there was no seasonality to the price whilst low stocks mean that there will be no repeat of the destocking event in China that caused a price crash a year ago. Furthermore, cost analysis of Chinese producers show that the marginal cost of production will remain above US$125/t CFR China until 2015, and above US$100 until 2020. With the falling AUD, Australian producers are likely to be major beneficiaries given supply at the Pilbara port and Chinese production are lower than forecast. However, the author believes that some of JPMorgans forecasts are questionable and that Rio Tinto should control more of its production in the long-run and secure market share into the future. (VIEW LINK)
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