Here are the iron ore charts for March 8, 2016:
Tianjin spot rose another 1.1% to $63.30. Paper flamed out. Rebar went bonkers. BHP was smashed -8.5% and RIO -9.5% in London.
The question at this point is is steel driving iron ore or iron ore driving steel? Given how this rally has panned out I would say the latter. Especially since we see this, from Andy Home at Reuters:
The iron ore bounce preceded the steel bounce which is not how it should work.
We know that steel mills have been caught short of inventories and are restocking as stimulus offers the hope of improved demand. Clearly at this point the steel output we’ve seen over the first few months of the year – running at annualised rates of around 700mt – is insufficient in this environment. But it takes a few weeks to fire up idled furnaces. Add the uncertainty around Tangshan mills owing to the flower show and rebar can chase the frenzy unleashed in iron ore while fundamentals catch up.
It’s a lot more noise than it is signal!
