Iron ore remains impressively weak. In the past, when the price has fallen swiftly it has to rebound just as quickly. There is no sign of that so far in this round of weakness. Here’s yesterday’s prices:
And charts:
Chinese steel is still falling:
And the coastal bulk shipping rallies have stalled for now:
There is a decent correlation between ore prices lagging Chinese GDP growth:
But it must be remembered that the big ramp up in 2009 was, if anything, more the result of changes in the ore market structure as the old annual contract system was replaced by spot and quarterly contracts. If we look at ore vs the fixed asset investment (FAI) component of Chinese GDP we can see that the ore led recent falls in infrastructure growth:
This is pretty loose stuff and I wouldn’t draw any conclusions from it, but it does lead me to question how much rebound potential there is for ore price just now.
