Eoin Treacy's view -
Power said that while a slump in iron ore prices has pushed out some high-cost producers from the market, supply was "not being cut back fast enough to reduce the overhang in the market".
"The response by high-cost producers ... has been much slower than certainly what I thought and what most in the industry thought," he said.
"But inevitably that needs to happen ... so the iron ore price will be low for long enough for that supply to exit the market. That's an economic reality."
While stockpiles at China's ports remain high, Power said steel mills were running with relatively low stockpiles.
Power said Fortescue's delivered cost into China is less than $50 a tonne.
"Our focus is on making sure that our production is as efficient and low cost as possible," he said.
The iron-ore oligarchy of Vale, BHP Billiton and Rio Tinto have been boosting supply even as prices have been declining. You don’t do that if you wish to sustain high prices. Rather they are attempting to drive high cost producers out of business in an effort to maintain market share and future pricing power.
Iron ore prices dropped below $80 yesterday for the first time since 2009 and a break in this year’s progression of lower rally highs will be required to signal a return to demand dominance beyond potential for some short term steadying.
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