Daily iron ore price update (restock)

Texture from MySteel:

China’s imported iron ore prices are likely to remain buoyant for the immediate future, thanks to additional procurements many steelmakers are undertaking ahead of the upcoming National Day Holiday over October 1-7, according to market sources on Wednesday.

“Iron ore prices may remain relatively strong short-term, because there are still many mills needing to buy some additional iron ore quantities ahead of the holidays. As long as trading is still active, prices will not fall too much,” a Fujian-based iron ore trader in Southeast China said.

That’s seems as good as any assessment for the restocking pulse. To the charts:

Spot and paper charge on. Steel has not updated. CISA output for mid-August remains titanic, limiting price gains and dropping them in due course.

Cars are also warning:

Chinese auto sales fell for the 14th time in 15 months, extending what’s already been a historically prolonged slump in the world’s largest car market.

Sales of sedans, sport utility vehicles, minivans and multipurpose vehicles in August fell 9.9% from a year earlier to 1.59 million units, the China Passenger Car Association said Monday.

For now, apparent demand is outstripping fading underlying demand as inventories pile up. This is out of season owing to the timing of the Brucutu restart. Any further price draw down will also be such though I still expect it. Not least when Vale returns another 20mt.

That said, my expectation of iron ore back into the $60s this year is fading. The next big seasonal weak spot is March/April 2020 and that seems a more likely time frame now for the full price reversion.

David Llewellyn-Smith

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 founding 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.

Latest posts by David Llewellyn-Smith (see all)

Comments are hidden for Membership Subscribers only.