Daily iron ore price update (Seroja)

The ferrous complex was strong last week as Chinese steel prices soared on the back of the steel output cuts. This is the paradox of central planning aimed at lowering input prices. Less steel means higher prices and any lower need for iron ore is more than offset by a stronger impulse to restock raw materials as margins widen. It is a form of arbitrage between underlying and apparent demand.

Anyways, spot was strong, paper was less so as futures contracts rolled forward and steel is at all-time records:

TC Seroja hit near Geraldton on the weekend. The adjacent Carnarvon Basin is a small iron ore exports in the range of 11mt so there might be some tony reaction in markets but probably not.

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About the author

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.