Daily iron ore price update (irrational)

Spot prices firmed but ignored the fireworks in paper markets. Steel is still going nowhere, really. CISA output for early June jumped to all-time records. The charts:

Reuters sums up the irrationality for me today:

“While the Brucutu restart will help boost supply, shipping the additional volumes from Brazil to China could take about 45 to 60 days,” the Itochu trader said.

Err, aren’t markets supposed to discount the future? Let alone only 45 days hence. As well, the recent rally in Dalian futures was triggered by hopes for a cessation in the trade war. But that would be bearish for iron as China cut stimulus. Then there is paper running ahead of spot now.

All signs that the rally is now running on sentiment alone and it is fraying. I don’t know when it will bust, a good candidate is September’s seasonal weakness, but we’re somewhere near the top here.

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