Iron ore prices for December 9, 2020:
Spot goes up no matter what. Paper is on fire again. Steel is stuck and margins are collapsing.
Never underestimate the iron ore market’s ability to move far and fast. Few markets are so pure in terms of price responsiveness to supply and demand shifts.
Right now we have:
- good demand;
- a big inventory restock for another six months;
- tight but slowly improving supply;
- possible La Nina supply disruptions;
- a DXY tailwind, and
- rising geopolitical risk.
This is enough to trigger a new hoarding cycle that blasts prices higher. $200 is quite possible.
It is more noise than signal for production given 100mt is already on the way so I do think it will last beyond Q1 or Q2 next year but it’s real nonetheless.