Ore reaches the neckline

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Here are Friday’s closing prices for iron ore:

And the charts. First, Chinese steel:

In short, prices fell again, despite rumours of monumental regional stimulus packages. There is clearly still fundamental weakness in the steel market. And for ore:

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The price of $116.20 is right on the neckline support of last year’s crash at $115.89 is the ominous head and shoulders pattern.

But 12m swaps are rallying now and I’m not surprised. There are mounting reasons for traders to buy the market: Chinese stimulus rumours, European QE, US QE etc. And check out China’s coastal bulk shipping indexes, both bouncing:

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My guess is we are close to a short term bottom for ore and the bottom looks in for thermal coal, for now.

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.