"What we saw last year was a massive destocking at a time when...

"What we saw last year was a massive destocking at a time when there was a lot of uncertainty within the Chinese economy," Mr Power said. "That's very different to what we see today. The Chinese economy is growing very strongly at 7.5 per cent and, on the size of the economy that it is this year, that's a bigger growth number than we saw at the peak in 2007.

"These fluctuations will always occur due to restocking and destocking cycles, we don't see any major change from the trading range it's been in in the last six months."

The stand-off between where equity markets think iron ore is headed -- the consensus is for a retreat in the latter part of the year to $US120 a tonne, and lower again in future years -- and where it actually is, is tipped to have a range of impacts, according to Commonwealth Bank equity analysts. Interesting comment.

For Atlas and other juniors BC Iron, Mount Gibson and Gindalbie, the leverage to elevated iron ore prices was said to be "massive".

"These companies are operating on earnings before interest and tax margins in the $20-$30-a- tonne range, so an extra $US10 a tonne "would result in large earnings and valuation upgrades". But like much of the equities market, the CBA analysts are expecting an eventual retreat in iron ore prices to an average of $US113 a tonne in 2014 and $US103 in 2015.

"Combined with weaker Chinese domestic supply growth, the iron ore market is currently tighter than most -- including us -- had thought," CBA said. It added that, relative to consensus, the iron ore price risk was "tilted to the upside in the near term".

What is overlooked in the concentration on the fe price, - is the massive increase in volumes sold. Even as costs per ton go down.

The bottom line is that even with lower prices, FMG is looking at rising profits.

As production increases the speculative element of the share price diminishes. Of course FMG's price will vary and good luck to those who can profit from that, but forecasts of dramatic price drops are starting to look a bit like a triumph of hope over reality.

part SMH report