"We have been thrown a curve ball by China."
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I suspect it depends upon who you ask. The official Feds line is transitory because it is the side effect of supply chain disruption. they argue it isn't demand that is driving the price of goods up like traditional inflation measure. Another view I have read is that Tech has driven down cost of production whether it be robots or fat margins from bank payment systems to every industry where products are delivered using tech. Platform economics such as Ali baba replaced a lot of brick & mortar retail outlet and the list goes on including music purchase etc.
African production will take a back seat if the IOP isn't justifiable and probably why China never really pressed the all out button to develop Simandou as speculated by some experts on their long term thinking.
Is China the largest consume of steel of just the largest producer? There is a profound difference. It would appear both US and China economies are using stimulus to get their growth going. One is printing money while the other is consuming steel for large infrastructure/RE. It is now shifting back to US multi-Trillion fiscal stimulus so perhaps the demand of steel has another big market?
FMG isn't the same as the previous cycle. The fundamentals got stronger, just the valuation that tracks the fate of IOP. A drawdown for any investor that bought high and price fall remains in DD if the commodity stays low for the period.
Incidentally, if one believes in gold=inflation hedge, yesterday slump in gold is again saying inflation=transitory?
FMG Price at posting:
$15.27 Sentiment: None Disclosure: Not Held
(20min delay)