Spot down. DCE paper fell further again last night but managed to rebound. Coking coal futures were smashed. Thermal spot too. Steel has rolled. We’re into full ferrous complex deflation now.
As said yesterday, throughout the Q1 blow-off, markets and media under-estimated how important temporary factors were in the price jump. The two most important were the Chinese restocking and weather-created distortions in the Pilbara, both of which are now passing.
Over Q1, Chinese ports added 15mt of iron ore inventory. That is an annualised rate of 60mt. As noted earlier today, that process has likely run its course. If port stocks now destock at the same rate then the reversal in demand from Q1 to Q2 is -120mt annualised of iron ore. That is a lot.