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Why One Bear Thinks Iron Ore Rebound Can Last

Gordon L. Johnson is a commodities bear who is shorting a number of related industrial stocks, and he now sees risk to his thesis on iron ore prices.

Johnson, head of alternative energy, metals, mining and equipment research at Axiom Capital Management in New York, notes iron ore exports from Australia and Brazil increased 9 percent year on year in June, but, Johnson and associate James A. Bardowski, also note U.s. steel imports in June rose 135 and are on pace to do the same in July. They write:

"Near-Term Risk Potential to Our Iron Ore Thesis. After falling >$40 per ton from the peak in mid-February to the trough in mid-Jun, 62% Fe iron ore prices have seen a mild rebound over the last two weeks, rising to the low $60s per...