Reuters has texture:
“We remain marginally bullish in our overall assessment of supply,” said Hui Heng Tan, analyst at commodities broker Marex Spectron. “Spot supply availability continues to improve as mills remain in de-stocking mode and domestic production picks up.”
The demand outlook for iron ore and other steelmaking materials is not encouraging.
“Margins took a turn for the worse given weaker steel prices,” Tan said. “This means that the slowdown in steel rates will likely persist.”
That seems about right to me. To the charts:
Spot was crushed. Paper rallied overnight on stimulus hopes. Steel has further to fall.
If you’re surprised by the magnitude of falls then welcome to the iron ore market. This is perfectly normal. Iron ore is always up in the escalator and down in the lift.
I have no idea where we go day to day from here. China will stimulate more but it is close to inconceivable that it can build more than it already is today. The most recent efforts have been less building oriented:
Anyway, there is iron ore everywhere now with piles more coming on. There is steel everywhere too. Global growth is sinking. In short, beyond your nose, whatever China does from here iron ore is still far too high.
$80 by year end. $60 average next year. Sub-$50 in the event of global recession, the chances of which are mounting by the day.
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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