Inside China’s steel and iron ore inventories

A few charts today from Morgan Stanley add more texture to the state of Chinese iron and steel inventories. First, China’s blast furnaces are ramping up:

That has steel inventories rising, clearly from a low base, but as the overall market keeps shrinking some large portion of this decline is structural:

Local iron ore production continues to rebound:

And iron ore is piling up at Chinese ports though mills have destocked their local holdings:

There’s more price downside in these numbers but it looks more likely to be a grind than a crash to the lows. That will not come until we reach the Q3/4 destock as underlying demand falters on seasonality likely converged with the Chinese economy slowing once more.