The ferrous complex was off the hook bullish on September 27, 2021 as spot went to Mars, paper fell overnight and steel remains strong:
This looks like a classic bear market rally to me. Does anyone even remember what they look like? Or is everyone an online influencer buying “stonks” these days?
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The underlying situation for iron ore is getting worse by the minute. Chinese steel output continues to COLLAPSE, hitting 2018 levels in mid-September according to CISA:
Output is down roughly 18% from the peak late-Feb period:
In annualised terms, this is a fall of around 240mt of output which translates to almost 400mt of iron ore. This exaggerates things because the annualised increments are only ten-day periods. Using the one-month moving average across the year, the fall from May to September is only 200mt of annualised apparent iron or demand!
But the real kicker is this. Even as steel output has COLLAPSED in a record four months, steel inventories have not fallen in any unseasonal pattern, indicating as clear as day that the weakness in iron ore is emanating from crashing underlying demand:
Buy it if you want!