Here are the iron ore charts for June 7, 2015:
The Qingdao iron ore price tumbled 5.12%, or $2.68, to $49.60. Benchmark Tianjin spot collapsed $2.30, or 4.4%, to $49.70. 12 months swaps took out record lows. Dalian, phew Dalian, fell limit down yesterday but then cratered 8% overnight, another 30 points, to 349 also a record low. It’s not even supposed to able to do that. Coking coal has been ripped into the rout and thermal is surely next. Rebar is beyond fucked. RIO and BHP were smacked 3% in London with the first signs of panic.
Is this a margin call situation for iron ore triggered by the Shanghai crash? We know that iron ore has been used in whacko collateral financing deals in China, and that there are all sorts of collateral daisy chains in Chinese finance. Is a reversal of such schemes underway in the major commodities? Margin calls do not stop until the overly-levered are cleared out. It appears we are going straight into the $30s.
