Andy Xie, Chinese economist, stated that iron prices will continue to fall into the $30s a ton this year.
Steel demand in China is shrinking while iron ore supplies are still rising, Xie, a former Asia-Pacific chief economist at Morgan Stanley, said in an interview from Hong Kong on Wednesday after benchmark prices plunged a record 10 percent. Iron ore rebounded 9.9 percent on Thursday. The slump in China’s stock markets, which showed a speculative bubble was bursting, had accelerated declines, according to Xie.
“Just look at Australia, new projects are coming up, look at all the stuff out there,” Xie said by phone. “For BHP, Rio and Vale, they will not cut production because it doesn’t make sense. Why’d you want to cut production and let the high-cost producers come online?”
“In the long run, we need only big, low-cost producers,” Xie said. “All these marginal producers that came up because of high prices, they need to vanish.”
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Dr Andy Xie 謝國忠, Shanghai-based independent economist, has just been named “ 50 Most Influential Persons in Finance”by Bloomberg, and is currently director of Rosetta Stone Advisors.Dr Xie is one of the few economists who has accurately predicted economic bubbles including the 1997 Asian Financial Crisis and the more recent subprime meltdown in the United States. He joined Morgan Stanley in 1997 and was Managing Director and Head of the firm’s Asia/Pacific economics team until 2006. Prior to that he spent two years with Macquarie Bank in Singapore, where he was an associate director in corporate finance. He also spent five years as an economist with the World Bank.
Dr Xie earned a PhD in economics in 1990 and an MS in civil engineering in 1987 from the Massachusetts Institute of Technology.