A couple of charts from the sell side throw some interesting light in the surprisingly firm iron ore market. First, from UBS, here are China steel mill iron ore inventories:
There has been a little restocking over the past fortnight, enough to raise days of consumption to 23, it’s highest in a few months. That obviously boosts iron ore demand beyond an equilibrium level while it continues.
As well, from Goldies, weekly exports from Brazil and Australia are again at their lows for the year:
Advertisement
Exports from Brazil and Australia (which account for 80% of seaborne supply) have often disappointed in the past four months. Volumes were consistently strong in June but levels dropped once again at the start of the third quarter (Exhibit 2). We believe scheduled maintenance of ship loaders is the latest culprit behind somewhat erratic volumes, and supply growth will resume in the short term as producers eventually put these operational issues behind.
My only question is are these genuine maintenance issues?
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.
