Here are the iron ore charts for May 21, 2014:
Paper markets managed a little bounce with rebar futures joining in. Physical iron ore was up but rebar average is still falling. The Baltic Dry capesize component is accelerating downwards, off 5.5%
I can only repeat that so long as rebar falls, iron ore won’t stabilise for long.
Meanwhile, Goldman has beared-up even more than before. From Bloomie:
The surplus will reach 175 million metric tons in 2015, compared with a prior prediction of 145 million tons, Goldman Sachs said in a report dated yesterday. The bank estimates that output will exceed demand by 72 million tons and prices will average $109 a ton in 2014, before dropping to $80 next year.
Iron ore has slumped 27 percent this year as economic growth in China slowed and mining companies from BHP Billiton Ltd. to Rio Tinto Group in Australia boosted output, shifting the global seaborne market into a glut. Banks from Standard Chartered Plc to Credit Suisse Group AG say more Chinese steel mills will go bankrupt and hurt consumption.
“The market is no longer in balance but in the early stage of a structural surplus,” analysts including Christian Lelong wrote in the report. “China will not act as the safety valve in an oversupplied market for much longer.”
…While the last decline below $100 in 2012 spurred buyers to rebuild inventories, boosting prices to about $159 in four months, this time around expectations of ample supply will encourage users to keep reserves at a minimum, said Goldman.
“We believe the current downturn could trigger another destocking cycle of similar scale,” Lelong, Daniel Quigley and Amber Cai wrote. “But the eventual rebound will be far less robust than previously.”
Reduced Chinese imports will also offset any impact of expected supply disruptions in India and a possible strike at Australia’s Port Hedland, the world’s largest bulk-export terminal, the bank said. Maritime Union of Australia, which represents tugboat deckhands at the port, approved unlimited work stoppages of 24 hours, 48 hours and 7 days on May 12.
