The ferrous complex was mostly weak on April 19, 2022:
The newsflow was poor:
The iron ore price fell on Tuesday after a spokesperson for China’s state planner said the country would keep reducing steel output this year.
Adding to concerns over demand prospects for the key steelmaking raw material, China’s steel production hub Tangshan implemented another round of covid-19 lockdowns in four districts for at least three days from Tuesday, the local government said in a statement.
Some charts from Credit Suisse tell the tale of why prices are far higher than fundamentals suggest they should be. In a word, it is hoarding.
Chinese traders are hoarding steel. Notice the lack of drawdown post-LNY this year. This is a first and is keeping steel production higher than underlying demand:
Iron ore at ports at records as well:
And whether because of bad weather or decision, producers have been hoarding over the past few months as well:
Shipments should pick up from here. But there is considerable hoarding in the market underway so it may well be the case that iron ore does not break down until the broader commodity mania does.