Iron ore rebounded on March 16, 2020. Paper stalled overnight. Steel fell:
Nothing much new today. I am increasingly convinced that we’ve seen the peak in prices for this cycle now. The bid should be strong for another six weeks before the May slump but a range of factors are mitigating against further price rises and strengthening the case for price falls through H2:
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- Vale is returning the volumes on schedule.
- China is tightening credit with a possible sharp fall in building ahead as catch-up growth ends.
- China’santi-pollution push has resumed with scrap rising.
- The US dollar is rising as America takes an indomitable growth, yield and inflation lead post-pandemic.
The one possible upside at this juncture is the Biden infrastructure package which would deliver a new lump of steel demand. But I do not expect it to be particularly steel-intensive given its likely focus on green tech, roads and rail.
Barring another shock of some kind, the peak appears to be for iron ore this cycle with a big downside ahead.