The year-on-year collapse is roughly 160mt per annum. From the peak it is 250mt:
As we know, the iron ore market has been afforded some protection by the thermal coal bubble which shut down 120mt of steel recycling:
But as coal crashes and power output normalises over the next quarter, this production will resume and the same amount of production will have to come out of BOF.
Needless to say, as this happens, the steel price will keep falling under pressure from the glut:
Especially since, despite huge output cuts, steel inventories are still too high:
There is nothing ahead here except much more and much deeper price pain for iron ore and coking coal.
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.
