Technical issues so no charts today. Iron ore spot was flat at 131.80. 12 month swap was up a touch to $113.87. Rebar average continued what appears to an entrenched decline to 3528. That was matched by futures. Port stocks fell sharply on the week after two weeks of gains. Indian sourced inventory remains very weak.
China was on holiday Thursday and Friday so we’ll likely see a resumption of spot ore prices falls this week. Conditions look pretty ripe for decent pull back. Intel from Reuters is revealing:
Plentiful supply of iron ore may weigh on spot prices next week when Chinese mills return from a long holiday weekend, unless steel demand picks up pace.
“We expect more supply availability from the big miners and that could drag iron ore prices lower. Chinese demand is stable but there’s just far more material available in the market,” said a Singapore-based trader.
…A sustained decline in Chinese steel prices cut appetite for iron ore this month.
Rio is shipping the first of the output from its Pilbara 270 ramp up and FMG continues to its volumes climb as well.
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Meanwhile, World Steel released its monthly figures:
Brussels, 20 September 2013 – World crude steel production for the 64 countries reporting to the World Steel Association (worldsteel) was 130 million tonnes (Mt) in August 2013, an increase of 5.2% compared to August 2012.
China’s crude steel production for August 2013 was 66.3 Mt, up by 12.8% compared to August 2012. Elsewhere in Asia, Japan produced 9.1Mt of crude steel in August 2013, a decrease of -0.6% over August 2012. South Korea’s crude steel production was 4.9 Mt in August 2013, down by -13.1% on August 2012.
In the EU, Germany produced 3.2 Mt of crude steel in August 2013, a decrease of -6.3% compared to August 2012. France’s crude steel production was 1.2 Mt, up by 21.7% on August 2012. Italy produced 1.1 Mt of crude steel, -7.5% less compared to August 2012. Spain’s production was 1.0 Mt, an increase of 10.3% on 2012 August.
Turkey’s crude steel production for August 2013 was 2.6 Mt, down by -15.4% on August 2012.
In August 2013, Russia produced 5.8 Mt of crude steel, a decrease of -1.9% compared to the same month last year. Ukraine’s crude steel production for August 2013 was 2.8 Mt, 4.1% higher than August 2012.
The US produced 7.4 Mt of crude steel in August 2013, down by -2.9% compared to August 2012.
The crude steel capacity utilisation ratio for the 64 countries in August 2013 was 75.4% and it is a 1.0 percentage point higher compared to August 2012. It is 1.4 percentage points lower than July 2013.
The strength in production is obvious in capacity utilisation, which is solidly above the comparable month last year. 13% year on year output growth is stunning but is exaggerated by the base effect of last year’s August hammering in China.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
