Here are the iron ore price charts for September 12, 2015:
Spot is unchanged on Friday’s holiday. Dalian fell sharply Friday night. Rebar average tells you what’s happening in steel, that is, nothing. Chinese port iron ore stocks are going nowhere. Steel output fell sharply into the Beijing parade.
So, to discussion. The iron ore rally has surprised but, really, not very much. As I have described many times, so long as Chinese port inventories remain low, steel mills lose some of their pricing power. This is compounded by the tricks used by producers to limit supply by holding it in fewer hands. It is also now clear that the major Australian producers (if not Brazilian as well) are not utilising increased capacity as promised. With RIO guiding analysts lower last week for its output targets over the next year the deluge that was scheduled for later 2015 is on hold. This is a clear victory for Andrew Forrest in the short term.
