COLUMN-Iron ore miners, OPEC are on same path, but not by choice: Russell
--Clyde Russell is a Reuters columnist. The views expressed are his own.--
By Clyde Russell
LAUNCESTON, Australia, April 27 (Reuters) - One of the themes from the recent weakness in crude oil and iron ore is that major producers are deliberately oversupplying as they are willing to tolerate falling prices in order to drive market share.
This sounds logical and provides a convenient explanation as to why output of these two major commodities has continued to rise even as prices fall to multi-year lows.
But there are problems with suggesting that the big three iron ore miners, Brazil's Vale and the Anglo-Australian pair of Rio Tinto and BHP Billiton , are on a parallel track with Saudi Arabia and others in the Organization of the Petroleum Exporting Countries (OPEC).
The main issue assumes that the iron ore miners and OPEC are in effective control of the markets in which they operate, or at least exercise a large degree of influence over them.
However, it's worth looking at the market dynamics for iron ore and crude oil to work out how the producers got themselves into the situation they are in, and how they may manage to improve conditions for themselves.
There are probably members of OPEC that wish their market was more like iron ore, and vice versa. Continuación...