The ferrous complex bounced on Friday 18 February 2022 after a brutal week of selling:
There is nothing to suggest any improvement in fundamentals. Adjusted for LNY, steel demand and supply look very weak:
Westpac’s Robert Rennie is onto it:
“Many commodities have critically low inventories, but there’s no sign of that in iron ore markets – on a seasonal basis they’re way above usual levels, so I would describe that recent rally as speculative in nature, and not justified by the availability of iron ore at China’s ports,” said Robert Rennie, head of research as Westpac.
“As regulators start to investigate miners, brokers and traders, they’ll see signs of hoarding and speculation, so I continue to expect prices to fall further targeting $US100 to $US110 – that’s where it should be trading, given the availability of iron ore in the physical market.”
Port inventory is still rising:
There is plenty of scope for Chinese authorities to keep smashing speculators to puke hoards. They appear very aggressive.
Fundamentals are still pointing to $100 and falling unless or until China panics on property.