Daily iron ore price update (bouncy)

Here are the iron ore price charts for February 13, 2015:

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Better price action but nothing to get excited about yet. The bounces in the 12 month swap and spot are infinitesimal, Dalian could set up for a double bottom but rebar average is still going nowhere.

Reuters has texture:

“Some buyers were expecting the steel market to get better after the Chinese New Year when the weather gets warmer,” said a Shanghai-based iron ore trader.

Construction activity in China typically gains pace after the Lunar New Year holiday, which starts next week this year.

“A recovery in steel output after the Chinese New Year could provide some short term support, however further growth in low cost supply and comparatively weaker steel demand in 2015 should drive prices gradually lower once again,” analysts with the National Australia Bank said in a note.

…”The China economy is not so good at the beginning of this year so we are not putting too much hope on the steel market after the holidays,” said the Shanghai trader, who has postponed any iron ore purchase plans until after the holiday.

The rally is speculative. There’s little to suggest any imminent turn in demand. Industrial metrics are universally lousy, credit has turned but is still down sharply year-on-year. The property market is headed for an at best bifurcated recovery, if not none at all.

The only thing going for the market is falling inventories of iron ore which could catch mills short if demand does bounce a little. Bearish until proven otherwise at this point.

In news, Anglo is suffering on Minas Rio:

Global miner Anglo American took a $3.9 billion writedown after commodity prices tumbled and it warned on Friday of more headwinds, but a steady dividend reassured investors.

The rout on commodity markets that has seen iron ore prices slide by half over the past 12 months has also forced Anglo and other mining groups to slash capital spending and cut costs.

“It’s going to be a tough one or two years,” Chief Executive Mark Cutifani told a conference call.

The company, which flagged a likely writedown last month, posted a 25 percent drop in underlying operating profit for last year to $4.9 billion, in line with expectations, while earnings per share fell 17 percent to $1.73.

The same lies ahead for FMG as the iron ore price falls below its marginal costs of production in the next 18 months.

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