From Goldman comes more evidence that the iron ore rally is closer to the end than the beginning:
Freight activity point to 2 consecutive weeks of rising supply
The latest data on freight activity at major iron ore export terminals in Brazil and Australia indicates a 10% increase in implied export volumes relative to the January-May average. Implied exports in Australia declined on the previous week but this was offset by record freight activity in Brazil. These data points are consistent with the recent increase in freight rates: transportation costs on the respective routes to China have rallied by 10- 20% since the start of the month. The causes behind weaker than expected exports in April-May remain somewhat unclear, but we believe they consist mainly of operational issues caused by weather events and, on that basis, they should have limited bearing on future performance. It is therefore likely that the recent improvement in implied exports will be sustained in the weeks and months ahead, allowing Chinese inventories to recover and iron ore prices to return to a level where marginal producers are again under pressure.
