Rebar futures continue to lead iron ore into the pit:
Dalian futures crashed Friday night and then got short-squeezed into the close. Good luck with that:
The week was still a bath of blood:
Same for coking coal:
The eponymous Tom Price has a crack:
In a note, Liberum Capital’s Tom Price said “we’re usually constructive on iron ore’s demand and price outlook during December to May, sometimes even short-term bulls” but not this year.
Mr Price said the slide to start 2024 “is now looking weaker” than a year ago. While industry checks confirm a “downbeat mood”, he said the sell-off has been more bearish than expected.
“There’s no corresponding shift in trade, inventories or steel output rates,” Mr Price said. “It follows that we suspect speculators are withdrawing; not even waiting” for Chinese steel mills to complete their seasonal restocking in May.
I assume that is a joke. What does Mount Tom Price call significant rises in steel and iron ore inventory as hot metal output falls?
The fact is everybody is caught with their pants down. Naivety seems to be the cause. Westpac:
While recent trends in China remain a concern for iron ore, we expect the significant cuts in interest rates and deposit rates, plus an end to uncertainty over developers’ finances, should quickly see a rebuilding of the investment pipeline with investment driven by households rather than direct Government support. As such, Chinese construction activity should pick up as we move into the second half of the year rebalancing the iron ore market.
Nope. The Chinese are done with property. There is no investment case amid sliding demographics, debt, deflation, deglobalisation, dictatorship and a disastrous supply overhang.
It will not get better. It will get worse. The sales flow is catching down to cratered developer starts, not the other way around.
Most importantly, the stock of construction activity has barely fallen as a big inventory of buildings under construction lags both sales and starts. It will also crash in due course:
Before this is over, rebar and wire rod are going to be worthless worldwide:
So are iron ore and coking coal.
