It’s a reality fellow iron producers might not be keen to hear as they are hoping for a rebound after lowest prices in years, Andrew McKenzie, BHP Biliton CEO, foresees that the spell of lower than sustainable iron prices might be longer than earlier anticipated.
According to McKenzie’s address to investors in New York, an oversupply of iron in the market will cause the iron prices “to take longest to come back into the balance”.
The situation should not be entirely surprising. BHP and its low-cost mining rivals, Rio Tinto Group and Fortescue Metals Group, ramped up production massively as they wrongly expected growth in China to continue for a longer time. Sadly, the Iron ore dropped for three years to 2015. And it is yet to sustain a notable rebound after an unexpected rally early this year.