Spot, paper, rebar average stable. But the real story here is Chinese port stocks, up another 1.95mt last week and ripping higher. The last few weeks of $50 plus iron ore is driven by this stock build and so long as prices stay where they are the build will be on-going. It represents an additional 35mt tonnes of demand since the Q3 2015 destock and 20mt this year so far. That is the demand equivalent of 25mt of steel output per annum or 3.1% of Chinese output at the current pace. It is a central explanation for why iron ore has held up so far this year.
Ebbs and flows in the great port pile tend to follow the vicissitudes of the property market. It grows with house price growth (as investment booms) and shrinks as house prices fall (as investment contracts), largely because mills and traders margins expand and contract with the same cycle.
Chinese house price and investment growth have peaked and will decline throughout the second half. I do not expect prices to contract but think investment will. The port pile is on borrowed time.
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