Find below the iron price complex price chart for January 18, 2013:
And the price chart:
My view of the Chinese data dump on Friday was that it was bearish for iron ore, given the failure of fixed-asset investment to push upwards:
The AUD agreed, down sharply from the release right through Friday’s northern hemisphere trade.
That did not hit iron ore spot, however, supported by a nice rebound in 12 month swaps. And in support of this strength, Friday’s weekly port inventory data again showed no impact from the recent restock, indeed port supplies fell on the week:
Arguments for further supply tightness were further supported by Indian supplied inventories, which also fell, seemingly headed for zero:
As a result, the supported swap market helped close my spread charts a little more:
Less stretched and a decent few days in swap and little more weakness in spot and things will be back in the normal range.
But if the failure to widely accumulate inventories is suggesting draw down for end-users, steel prices are still signalling the limits of fundamental demand. Rebar and billet are tractor-beamed to recent highs:
And as such the rebar spread to iron ore remains epic:
We are slowly working through the excesses of the recent market. In my view, the most likely short term scenario is that this continues, with spot headed to somewhere into the high $130s in some kind of retest its technical support line before bouncing:
I see nothing to alter my forecast of a first half price range between $130 and $150.
