News Wrap

IN THIS morning’s News Wrap: iron price to slump, ignoring better data; mining tax tipped to bolster budget; and Goldman Sachs faces probe over fixing aluminium prices.

Lou Caruana

Iron price to slump, ignoring better data

Analysts have warned the resurgence in the iron ore price cannot be sustained beyond next month, when some forecasters expect the spot price for the steel-making ingredient to fall below $US100 a tonne, according to the Australian Financial Review.

The rebound in iron ore has caught traders off guard and few are able to put its rise down to anything more specific than a combination of higher than expected steel output from China, lower exports from India and low levels of port stocks.

The key steel-making ingredient was fetching $US138.70 a tonne on Tuesday, extending its gains since July to 18%.

Commodities analysts have been bearish on the outlook for iron ore since last year’s price crash. They believe that increased supply out of Australia will bring down its value and China will not need to buy as much as its economy cools.

Mining tax tipped to bolster budget

The federal government is expected to reap hundreds of millions more in revenue from its mining tax even as it warns of a peak in the resources investment boom, according to the Sydney Morning Herald.

The Pre-election Economic and Fiscal Outlook by the treasury and finance departments mirrored the government's budget update in early August for slower growth, a higher unemployment rate and larger deficits.

But it bumped up the forecast for cash receipts from the minerals resource rent tax by $450 million over the next four years to almost $6 billion.

Goldman Sachs faces probe over fixing aluminium prices

Goldman Sachs has been subpoenaed by US federal regulators investigating complaints that its metals warehouses intentionally created delays and inflated the price of aluminium, according to the Sydney Morning Herald.

The Commodity Futures Trading Commission has issued subpoenas to Goldman and owners of other major warehouses as part of its inquiry into irregularities in the aluminium market that are believed to have cost consumers billions of dollars since 2010.

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