Daily iron ore price update (crunch)

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Yes, the falling anvil has returned! The table for January 20, 2014:

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With ten days still to go before China’s new year break, I see no reason why spot could not threaten $110 downside support on this move:

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iron ore price

The key downside support for the 12 month is $107. If that goes, look out for a deeper move.

The Dalian May contract is still falling:

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Dalian

But the real culprit is rebar:

rebar

Steel mills are not making any money and so they don’t want any more iron ore.

The early year steel restock should still go ahead but the following chart from Credit Suisse yesterday shows that steel inventories are unseasonably very high at steel mills:

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steel

That leaves traders to restock and how aggressive are they going to be in this environment?

As I said yesterday, abundant inventories, abundant supply, faltering demand, technicals failing, you do the math.

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About the author
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.