Is corporate greed going to drive Australia into recession?

I try not to write about the general economic circumstances, but I have to report back on this one. The company I work for deals with OneSteel an offshoot of BHP Billiton the mining and commodities giant. From March to June of this year we have seen prices rises of 44.9% on the steel we buy, with more expected to come in July.

The excuse from OneSteel is that it is there is a shortage in world supply. However reading the press, and their releases it seems like in Australia, they create the shortage by limiting shipping to their customers, this means that demand is always behind supply. Internationally it seems that they are trying to play the spot iron ore market in China to get better prices.

I’ve got to say that the chain goes like this: –

We buy steel – we increase our prices – our customers increase their prices – consumers pay more – inflation rises – risk of recession increases.

At the same time of coarse the bhp shareholders are raking it in from massively increased profits.

I’m not against capitalism, but you have to say that this is a really short term view from BHP. If they drive us into recession, they can forget house building, and many of the other industries they rely on for their bread and butter. I guess what I’m saying here is forget your short term profits and think of your market as a whole bhp. It’s up to you bhp, and many of the other corporates. Short terms gain and long term pain, or a more even market where you are more likely to still be here in 5 years time!

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