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Iron ore charts for December 12, 2016:
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Tianjin benchmark rocketed 4% to $82.80. Paper rocket. Steel rocket. Coking coal futures off. Thermal correction taking a breather.
I want you to take a look at that rebar chart and tell me that everything is OK. This is now the craziest price leap in the history of Chinese steel. There is nothing in the fundamentals to justify it. Yes, production will be up a little this year and there is some rationalisation but capacity remains vast and margins have been killed. Like the bulks, steel is being driven wild by a futures market bubble.
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About the author
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.
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