Here is the iron ore price table for January 16, 2013:
And it is farewell froth time:
So, clearly the Chinese restock is done for now. Swaps are holding the line at the $120 support and I expect this correction could take us all the way back into the $130s, with ongoing repairs to my once glowing spread study:
Shanghai steel futures fell for a second day on Wednesday amid uncertainty over the outlook for demand from top consumer China, which has curbed appetite for iron ore and may continue to drag down prices that rose to 15-month highs last week.
The most active rebar contract for May delivery on the Shanghai Futures exchange was down 1 percent at 3,931 yuan ($630) a tonne by the midday break, losing ground from last week’s six-month peaks as Chinese spot steel prices dropped.
That could further sour demand for raw material iron ore, whose price gain of nearly 40 percent from December has bloated costs for most Chinese steelmakers. “Most of the mills have stopped buying iron ore for the time being and sales of steel products are also very slow,” an iron
ore trader in Shanghai said.
The rebar falls do not register on Bloomie for some reason. I guess tomorrow. Anyway, here is my second spread study, also reverting:
The piece goes on:
“After next week, I think buyers will come back ahead of the Chinese New Year,” said the trader, adding that prices could fall to between $145 and $150 before buyers return to stock up ahead of the week-long Lunar New Year break in February.
Still, the next restocking phase could be modest, since most mills have already done so over the past month, he said. China’s iron ore imports hit a record 70.94 million tonnes in December, customs data showed last week.
“I’m not putting too much hope on steel demand. The economy might be a bit better, but the new government may not concentrate on infrastructure investment that much, since the focus is on a more sustainable growth path,” said a purchasing manager for an iron ore trading firm in Shanghai.
That sounds about right.
