Here are the iron ore charts for March 20,2014:
Nothing much going on here. Rebar is crawling out of its funk. The twelve month swap is chronically weak. Spot held up. The Baltic capesize component is still charging, up another 5% yesterday, but needs to run much further to signal a strong return to buying.
So, lackluster despite rumours of Chinese stimulus. One reason may be that the Shanxi Highsee steel mill bankruptcy has returned to the headlines:
One more possible bankruptcy is looming in China as the largest private steel maker in Shanxi has failed to repay debt totaling 3 billion yuan (HK$3.75 billion) on time.
“Highsee Group’s 3 billion yuan debt was overdue last week,” the 21st Century Business Herald reported yesterday. “The company is running in red, and has failed to pay workers for months. Many of its furnaces have stopped operating.”
This comes after domestic steel prices fell to their lowest level in more than eight years in mid-March as a result of weak demand and a surge in output.
Who knows what’s real and what’s scuttlebutt? Either way, it makes for a poor backdrop for iron ore. Here are a couple more charts from JPMorgan showing the rebound in steel and ore is weak and vulnerable. Steel stocks are still too high:
Ore stocks could go a lot lower if demand does not reappear:
But sentiment is at least off the canvas at mills:
