Find below the iron ore charts for February 17, 2014:
All good in iron ore land with Chinese credit widely and wrongly seen as super! Meanwhile, real demand continues to plumb new depths of hell:
Rebar futures rallied smartly with other paper markets but are still very low at 3456 yuan.
Meanwhile, even the tired old girl of the AFR is onto what’s really happening:
Iron ore stockpiles in China, the biggest buyer, climbed to a record as traders imported more to use the steel-making ingredient as collateral to get credit, while demand at home remained weak.
Inventories at Chinese ports were 100.25 million metric tons last week, climbing above a 100-million-ton mark for the first time since July 2012, according to data from Shanghai Steelhome Information Technology Co.
…“Cash-tight Chinese steel mills refrained from buying raw materials, while imports kept piling up at ports as more cargoes are being hauled in for trade-financing deals,” Gao Bo, chief iron ore analyst at Mysteel.com, a researcher in Shanghai, said by phone from Beijing today.
Steel mills and trading firms in China are contending with increasing difficulty in getting funding, said Mysteel’s Gao. “The funding situation in the steel industry was getting worse last month,” he said.
…Stockpiles of steel products also rose as construction activity remained weak after the Lunar New Year holidays, Gao said. Traders’ stockpiles of rebar, a building material, jumped by 65 per cent this year to 8.55 million tons last week, according to Shanghai Steelhome.
It just goes to show how markets can oscillate around perception. Everyone was more bearish than Chinese stats illustrated and so prices rise even though the figures are actually weak and current prices are precariously high! It’s gaga. Stay focused on structure, which is getting worse not better.
