Fortescue Metals chief Nev Power says, quite rightly, that the iron ore price is one of the biggest issues facing Treasurer Joe Hockey ahead of next week's budget.

The noise around the iron ore feud between Fortescue and rivals Rio Tinto and BHP Billiton has eased off a little over the past week, helped by the fact that the price of iron ore is back over US$60 a tonne.

But don't expect Fortescue to take its foot off the pedal as founding chairman Andrew Forrest continues to apply political pressure on his rivals over expansion plans he says are flooding the market with iron ore and lowering prices. Forrest on Thursday blamed the decision to abandon the miner's fly-in, fly-out roster on his larger competitors. About 700 workers are expected to lose their jobs.

Power was surprisingly quiet on the issue of what his competitors were doing, when he spoke to a packed room at the Macquarie Australia conference, joking later that perhaps everyone had had enough of the issue.

But while he was not directly referring to BHP Billiton or Rio Tinto, he highlighted the changing market dynamics which are influencing iron ore prices beyond good old-fashioned demand for the commodity.

FUTURES TRADING RAMPANT

He says the advent of futures trading has changed the market dramatically over the past year. While major expansions pushed up stockpiles, they have since declined. But although the physical market has been in deficit, he says the apprehension of oversupply and futures trading has meant speculation on the iron ore market has been rampant. The amount of trading in iron ore futures in the month of April alone was the same as a full year of physical demand for the commodity.

"The turnover in the futures market has been many times, 10, 20, 30 times the volume in the physical market," he says. Reuters reported earlier this month that Chinese speculators were buying a record volume of iron ore futures on the Dalian bourse. The volume of iron ore futures traded there reached 18.6 million contracts in April, which is the equivalent to 1.86 billion tonnes.

That compares to annual global seaborne trade of about 1.4 billion tonnes.

Fortescue's point here is that it believes commodity and futures pricing are being influenced by signals from BHP and Rio Tinto that they would continue "oversupplying" the market.

But it also highlights the challenges for all miners when sentiment plays a greater role than previously in determining the price as stockpiles come down.

STRONG CHINA GROWTH

Fortescue, which supplies iron ore to about 60 steel mills in China, remains confident China's growth is strong. It is a popular pastime for many executives to come up with fresh data to illustrate the ludicrously enormous opportunities coming out of Asia compared to Australia's miniscule population. Power reminds us that China is where the United States was in the mid-1920s, and that it has the same land mass but more than four times the number of people. It also has the same number of people as the entire US population who are still to urbanise in the next 20 years.

China remains the main game for the iron ore market, although there are stirrings in India and other Asian markets.

Despite the impact lower iron ore prices are having on Western Australia's budget, Fortescue does not expect there to be any changes to the royalty system. "The crash in the iron ore price has drained a lot of value out of the economy. I think there will be a lot of things on the agenda but I hope royalties will not be one of those," he says.

Power was not ruling out asset sales either, although there is nothing being discussed with potential buyers at the moment. There is less pressure on the miner now that it has de-risked its assets. The company has previously looked at selling a stake in The Pilbara Infrastructure (TPI).