Fmr. Noble Vice-chair: "China to Take Iron Ore Pricing Away From Producers" or Today's Word is Monopsony
In economics, a monopsony (from Ancient Greek μόνος (mónos) "single" + ὀψωνία (opsōnía) "purchase") is a market form in which only one buyer faces many sellers.
In the microeconomic theory of imperfect competition, the monopsonist
is assumed to be able to dictate terms to its suppliers, as the only
purchaser of a good or service, much in the same manner that a monopolist is said to control the market for its buyers in a monopoly, in which only one seller faces many buyers.
In addition to its use in microeconomic theory, monopsony and monopsonist
are descriptive terms often used to describe a market where a single
buyer substantially controls the market as the major purchaser of goods
and services. Examples include the military industry and the space industry.
From Mineweb:
China will take control of iron ore pricing in the next two years as
rising supplies of the steelmaking commodity return bargaining power to
buyers, former Noble Group Ltd. Vice Chairman Harry Banga said.
Prices of the second-biggest seaborne commodity will drop to $95 to
$110 a metric ton, said Banga, who in May started The Caravel Group Ltd.
Iron ore traded at $135.90 a ton at the Chinese port of Tianjin
yesterday.
Mine expansions by producers including Rio Tinto Group and BHP Billiton Ltd.
will push the market into a surplus next year, and the 82 million-ton
glut will be the most since at least 2008, Goldman Sachs Group Inc. said
in August. The shift in bargaining power may also spur an expansion of
the iron ore securities market in Asia, Banga said,
“Buyers will be calling the shots,” 63-year-old Banga, who has traded
iron ore for almost 20 years, said in an interview in Hong Kong. “It
will change very quickly over the next two years and the Chinese will
then control more of the pricing.”
Banga, who left Noble in January after stepping down from an
executive role at Asia’s largest commodity trader in 2010, started
Caravel with his sons Angad and Guneet. Other than iron ore and
shipping, the company plans to expand into trading of commodities
including coal, manganese, and nickel, he said....MORE
