Daily iron ore price update (ferrous glut)

Texture from Reuters:

“Sentiment of traders has collapsed… People don’t know how much further the iron ore will go down and everyone is desperately getting rid of the goods they hold,” a Hebei-based iron ore trader said.

…However, analysts expect that iron ore prices will find support soon, as demand at mills remain firm as environmental measures in northern China would relax in August.

Utilisation rates at Chinese mills across the country had risen to 67.27% as of last week from 66% in July, according to data compiled by Mysteel consultancy.

Whatevs. The great untold story of this market is how Chinese iron ore purchases are falling. Even with a big rebound in July to 91.05mt amid a mad dash for supply, the rolling annual is now ensconced at -3%:

Exports of steel were soft at 5.6mt:

Helping keep CISA steel output in early July still at records:

And rebar inventories continue to climb at alarming rates in the first week of August:

Yet even with this astonishing forced output of steel, China needs less iron ore. The scrap revolution is here.

To the daily charts:

Spot up. Paper down. Steel up. Who knows where we go day to day from here. All I can say is that fundamentals point at $60 (and falling) iron ore and it will come in due course.

Houses and Holes

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 fouding 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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