Here are the iron ore price charts for June 2, 2014:
Chinese derivative markets were closed but iron ore spot and Singapore derivatives did trade with a small bounce. The Baltic Dry capesize component was up 2%.
Yesterday I proposed two scenarios for prices this week: an accelerating crash or easing in selling. The latter has more confirmation today on the deepening long-dated contango. We could run a little way.
However, I do not expect a sudden rebound or restock by Chinese mills. In fact, if we settle for a while or rebound a little I’d expect renewed pressure on the price. The context for steel demand is not improving. The mini-stimulus is real but will not turn around property. The world is swimming in cheap Chinese steel with Japan’s exports collapsing in recent months. There is no reason to expect improved output.
As well, India is clearly determined to avoid any repeat of the Goan debacle in Odisha and Brazilian iron ore exports powered higher in May.
Nothing fundamental has changed.
