Via Macquarie:
Iron ore update: restocking, skewed demand & cyclically wide discounts
Increasing optimism towards 2H17 steel demand, together with talk of further steel capacity cuts, has prompted Chinese mills to restock iron ore, driving the spot benchmark price to over $75/t in August, up by ~$22/t from the lows of $53/t touched on June 13. The onset of the price rally coincided with sharp falls in short-term borrowing costs in China around mid-June, as the PBoC acted to inject liquidity in the Chinese banking system. While the pullback in Shibor acted as a catalyst, data is now coming through depicting a stronger demand picture.
