The ferrous complex was mixed Friday July 9, 2021 with daily weakness giving way to evening strength as markets jumped on Chinese credit news. Spot was down, paper up overnight and steel flat:
Friday evening’s better Chinese credit data and RRR cuts have not altered my immediate outlook. I still see Chinese growth slowing through H2 and iron ore falling from Sep/Oct.
There are 764 words left in this subscriber-only article.
Start your free 14-day trial today!
However, the swiftness of the PBoC panic does have implications for 2022. Chinese monetary easing happens in phases that intensify with the failure of each effort.
I now expect rate cuts in Q4 this year and renewed fiscal in Q1, 2022. That means iron ore prices will be sustained at higher levels than previously thought from Q2-2022.
It is still a fair bet that we see the price halving over the next year but deeper downside may take a little longer as we wait for supply to overwhelm the market deeper into 2022/23.