The ferrous complex was strong on January 11, 2022 as everything jumped:
Encouraging bulls, steel production launched in late December:
There are 948 words left in this subscriber-only article.
Get your first month for $1
Even more bullish, mill steel inventories plunged over the period. However, I’d suggest that this is largely thanks to traders snapping up steel stocks amid the mad rush.
I will add that it is likely that this is also the resumption of steel recycling so it does not mean higher iron ore demand. Chinese coal prices are tanking and electricity supply for EAF is firming up:
Chinese coal futures fell to the lowest level this year after Indonesia allowed some cargoes to leave ports as it considers lifting a temporary ban on exports of the fuel.
Thermal coal on the Zhengzhou Commodity Exchange dropped by as much as 2.9% Tuesday after Indonesia’s government said the previous day that it would immediately release 14 ships fully loaded with coal that’s already been paid for by buyers. It said it will decide Wednesday whether to broadly resume exports after halting them Jan. 1 to ensure supplies for domestic power plants.
For now, none of that matters much. We’re in the seasonally bullish phase with rains curtailing Brazilian supply, mills restocking, and China stimulating (such as it is). That is all the drivers the market needs to bid. How high prices go before reality returns is anybody’s guess. Iron ore usually overshoots.
However, to my mind, this remains a bear market rally.