Here are the iron ore charts for April 8, 2014:
Decent paper market action with all futures are swaps up. Physical is more mixed with spot firm but the rebar recovery is a complete joke and is indicating still very poor steel demand. Also, the Baltic Dry capesize component was poll-axed 11.5% yesterday.
There is some evidence of better steel demand, from Reuters:
Inventory of trader-held steel products in China, the world’s biggest consumer, has fallen by nearly 2 million tonnes in the past five weeks, reflecting firmer demand. Consumption may strengthen further through May when demand for steel usually increases along with brisk construction activity.
The most-traded rebar for October delivery on the Shanghai Futures Exchange hit a high of 3,406 yuan ($550) a tonne, its loftiest since March 7. It was up 1.3 percent at 3,397 yuan by 0229 GMT.
The most-active September iron ore contract on the Dalian Commodity Exchange rose 2.5 percent to 820 yuan per tonne, after peaking earlier at 824 yuan, its highest since Feb. 24.
Stockpiles of five major steel products fell to 18.67 million tonnes as of April 4 from 19.27 million tonnes the previous week, data from industry consultancy Mysteel showed.
They have dropped continuously since the end of February when they stood at 20.33 million tonnes.
Stocks of rebar, a construction steel product that accounts for bulk of the inventory, stood at 9.34 million tonnes last
week, down from 10.42 million tonnes at end-February, the data showed.“Market participants are anticipating that consumption will rise further in April and May, and the government is also trying to stimulate the economy in the short term,” said Zhou Ting, analyst at Jinrui Futures in Shenzhen.
Meh. That’s hopeful analysis. As I’ve noted before, the iron ore recovery is well ahead of any recovery in steel demand, with the BDI now in spectacular collapse mode, and mills probably having been restocking for the better part of a month, I reckon we’re pretty close to a short term peak for the iron ore price.