Here are the iron ore charts for June 16, 2014:
The arse is falling out of the iron ore market. Paper markets are in free fall. Dalian six month, rebar futures and Singapore 12 month swaps are all at their lowest ever or lowest since the GFC. Physical is just as bad with rebar average swan diving to record lows, the Baltic Dry capesize off 2% and spot iron ore within spitting distance of its 2012 low at $86.70.
What is most remarkable is that port pile is still sitting there, unliquidated. Texture from Reuters:
“Liquidity is a big issue at the moment because many banksare not willing to open letters of credit,” said an iron ore trader in Shanghai.
…”Mills are buying in small lots and they keep on pushing prices down sharply,” said an iron ore trader in Tianjin, addinga softer real estate market in China is also hurting demand for steel.
…High inventories of iron ore stocks at Chinese ports have also pushed mills to do “short rounds of restocking rather than aggressive restocking as seen in previous years”, investment bank ANZ said in a note.
Yep, it’s a structural shift from a hoarding market to a real time delivery market. I’m beginning to wonder how aggressive the Q4 seasonal restock will need to be. Further down to go.
