The ferrous complex was much calmer on May 2, 2021 than in recent times. Spot hardly moved. Paper warmed a bit. Steel fell:
In other news, Westpac reports on the rebound in Aussie volume after Q1:
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May Australian iron ore exports fell short of our expectations at just 75.7mt. That’s -1%yy and -4%3myy. Given recent price gains and the weather-based drag on exports in Q1, we had expected to see a stronger rebound in May. While Port Hedland exports were at an 11m high, Port Dampier & Cape Lambert exports were still weak suggesting there may be a lingering impact from the April rains.
The rebound may have disappointed so far but it will ramp up further ahead. From Q1, the annualised change in available volumes is well above 100mt per annum. Brazil will add more.
This is one of the major reasons why I do not see iron ore spiking to $300 from here. More supply is coming both seasonally and structurally and that should be enough to prevent another blowoff top.
Don’t get me wrong. No doubt, the market is still very tight. Chinese demand is still absolutely off the chart. But, it, too should begin to fade through the latter part of the year as tightening on property takes effect.
Third, there is jawboning coming from Beijing which should give speculators second thoughts.
To get to new highs and $300, we’ll probably need another change to the market structure. Either Brazil has another accident or India pulls its exports or China reverses course on tightening. A collapsing US dollar might give us one more leg up but it’s probably not enough by itself to push $300.
You never know with iron ore. Once it runs, it runs WILD!