Find below the iron ore price table for May 27, 2013:
Not a great day. Rebar average and futures both hit their September 2012 lows. Here is the chart:
There is hope in the steadiness of the 12 month swap which has refused to budge below $110ish. But note as well that unlike spot it has marched inexorably lower since 2011, never breaching the highs of the past move. It really is only a matter of time before it turns lower.
And there is still room for spot to close the gap on the spread charts. Spot to swap still has 5% falls to return to historic averages:
And spot to rebar average (index) still needs to close by another 10% to return to historic averages:
In other news, Chinese port stocks were flat last week.
I’m becoming more attracted to the idea that what we are going to see over the second half is a steady grind lower. The bubble in Chinese inventories has passed. There is no big stockpile to run down for a major price bust.
But steel prices and demand are signalling production cuts ahead and as more ore comes online in the second half we should expect discounting to accelerate.
Hence a steady downtrend (with bumps and falls) seems a reasonable proposition.
