Daily iron ore price update (smash, UPDATED) (members)

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Here are the iron ore charts for Friday August 22:

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Paper markets held up, including rebar futures, but physical got smashed. Spot is on track to retest its 2014 low at $89 and looks likely to break it, frankly. Benchmark port stocks are rumoured to be selling in the mid $80s per tonne. The BDI cape fell and in news that will not help markets today, port stocks rose on the week 300k tonnes.

Hard to see anything other than more falls this week. These kinds of bleeding moves tend to culminate in a capitulation phase with price-gapping, and steel demand is clearly getting worse not better. Another reliable indicator is the spread between physical and futures which typically enters contango before the former reverses. We’re still in backwardation.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.