Find below the iron ore price table for September 26, 2013:
And the charts. The rebar decline goes on:
And spot continues to hold up:
Though it must be said that the spread has not really worsened:
I mooted yesterday the mystery of weakening steel prices but strong iron ore prices. Here are a couple of charts from Citibank that may explain it:
The restock is more advanced than I supposed yesterday (though is clearly stronger in the first chart than the second which is frustrating!).
Nonetheless, the current strength in the iron ore appears to be the result of rising inventories at steel mills despite high output. This is an interesting twist on yesterday’s debate about whether we’ll see a Q4 bounce. I previously argued that we won’t see such if there is no destock first and that looks like it could be playing out. (And yes, this is toying with a back flip from yesterday’s thinking).
This could be quite important. If mills manage to replenish stocks over the next few months then we’ll head into next year with high inventories but prices modest (relatively) at $120-130. With a likely destock after the early year Chinese steel production surge, ore prices could be vulnerable to a tumble below $100 with new supply rising.
All speculative at this stage but I’ll keep a close eye on the restock.
