Iron ore is breaking down

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Find above the latest spread of key iron ore prices. Chinese steel prices have rolled over and are falling, both billet (green) and rebar (pink). 12m iron ore futures have busted support and are threatening new lows vis-a-vis last year’s plunge. Iron ore spot is sitting right on the support that has held since last year’s crash. You might also notice that there is a pretty neat little head and shoulders pattern on the spot price (white).

That this has happened even as China reports more than reasonable growth is not encouraging. We appear to be about to take another hit to the terms of trade.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.