Futher signs of iron ore restocking

A couple more data points this afternoon suggest a turn for the better in iron ore markets in the short term. The Baltic Dry Index is shooting up again, especially the iron ore-centric capesize component:

baltic dry

The index has recovered some of its predictive power for iron ore in the past year, nicely signalling a jump in prices of about $30 in mid 2013. So that ‘s one to watch.

There is also overnight official data on steel production for January and February which came in better at low growth of 4.9% year on year. Here’s a chart from BofAML:

dbsb

It’s a start more akin with 2012 than last year but still better than broader data suggested, and I had feared. This firms the prospects of a modest restock.

Dalian futures are up today 0.5% and Shanghai rebar is down 0.2%. Interesting to note as well that the yuan USD/CNY fix was up 26 points. There’s a mini currency war going on up there…

9 Responses to “ “Futher signs of iron ore restocking”

  1. dexterbland says:

    Those steel output figures look quite different to the CISA and World Steel Association versions which already showed -ve growth. But in any case its a chart that is trending down quite rapidly.

    • Yes, not always easy to know which to trust. That’s china for ya!

    • dexterbland says:

      Wonder what would have been the consequence of negative steel output growth on yesterday’s industrial production figures? Quite a bit I would guess. Not sure that China’s ready to acknowledge that yet, not that they would fudge the figures of course….

    • 3d1k says:

      CISA: steel production averaging 2.08 m/t per day up 5.86% late Feb.

      • dexterbland says:

        Right. That was the highest rate of the period and lower than the NBS 2.2 mt/dayaverage for Jan/Feb. CISA Jan figures were much lower which left a lot of catching up to do.

      • Same rate as last year though.

      • twincamp says:

        its on track for a 4.5 pct rise this year whats more is the export figures which premarily caused
        the slump in io prices was calculated bssis fh feb, and as you sure know, the chinese new year
        ran 31 jan to 13 feb so little wonder ….

        besides another miss infomed point was that actuallt the BCI declined nearly 20 pct on wednesday
        but you dont see that in that chart.

        haixins trouble has been known a long time, little news there and a minor players in the grand
        scheme of things.

        the add 100 million tonnes of additional iron ore coming out of oz this year will find a home
        quite essily since no new exports is coming out of brazil and their ports cant handle it the
        big miners knows this and just sitting waiting for the chinese to continue their pollution
        clean up so they csn supply this new demand.

        it’ll be a very nice slice of cake to get.

  2. nexus789 says:

    Does this mean that ore is going into steel production or are they having to take the ore under already in place contracts?

  3. twincamp says:

    it will be difficult to accurately track the greatest gangrantum of iron ore substitution ever witnessed
    but the more reforming the quicker it will happen. it wont happen over night but its happening right
    now. 1 major overseas ore supply disruption and the 35 days port pile buffer will dwindle before you
    can buy even the quickest Dalian iron ore futures.

    When the Chinese opted to build iron ore port stock of 70 million tonnes in 2007 it was because
    they wanted to have supply security. Same with crude oil and lately soya beans.

    My take is that if the price of IO goes to 80 or even over shoots to 70 they will be piling into
    to expand the port stocks. When time arrives there will only be about 20 importee against
    current plus 100 traders.

    its dog eat dog in China.