Iron ore price, page-47756

Should IO fall in price microeconomic theory also says that demand should increase. It also says that production will cease to be economic for some producers thus decreasing supply which usually has the effect of raising prices again.

It is shame your microeconomic theory has no basis in reality.

a) IO demand is price inelastic Falling prices have negligible effect on demand.

b) Grade discounts increase as the IO price falls. It becomes far more economical to ship and smelt high grade IO even at a 15-25% premium.

c) Miners with the highest grades (eg Vale) increase their share of the market.

d) An unofficial 'cutoff' for low grade IO becomes standard. For decades 63.5% was considered the 'standard' seaborne grade. It was downgraded to 62%. FMG low grade ore was literally worthless until the 2000s China boom.