It’s all good today! Not much movement overnight in the steel complex but enough to suggest that the big falls are behind us. 12 month swaps are starting to price with some consistency in the mid $90s range:
There is also clearly a lift in broader sentiment as Draghi applies his band-aid and although it will do little for the Eurozone economy, which will keep the external pressure on China, there are reasons for traders to consider a bounce. Same goes for the increasingly rapid approvals coming out of the NDRC. Might be a pause in selling but you know what I mean.
Still, we’re not seeing any stability yet in Chinese steel prices:
As I’ve said before, it would make sense to see a deep contango between ore and its swaps for some time. Especially since, as reports suggest, that Chinese mills have been buying cheaper new spot ore while some material portion of China’s existing inventory, which was bought by traders at higher prices, sits idle:
That inventory may represent an overhang for any bounce. Indeed, you never know, the price may not go as low as feared, but the bounce may not be as strong either. Depends upon the cojonies of those holding that inventory.
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