Yesterday China steel PMI was poor. The headline number is OK at 43 with new year output pumping on the inventory build. But new orders have cratered:
This may be temporary based upon virus disruptions. Even so, it opens the distinct possibility that mills will destock their arses off when they return from Lunar NY, ten days hence.
The price is very high. There are still restocking, supply issues, geopolitical and weather supports.
But slowing Chinese demand is locked in for H2 and there is s good chance that iron ore is going to take a tumble before then, especially after CNY and in May:
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.
