The ferrous complex was hit hard on July 1, 2022:
The reasons is pretty simple. Chinese steel mills are out of room to store overproduced steel:
In China’s biggest steelmaking province Hebei, local media reported that some mills had opted to implement an annual overhaul of furnaces earlier than usual, citing no more extra room for additional stocks.
“It’s not just China where steel output is under pressure,” said Warren Patterson, head of commodities strategy at ING. “Expectations of slowing economic growth, and the growing risk of recession, are clearly not great for global steel demand.”
Top iron ore producers Australia and Brazil are likely to ramp up supply, which may add downward pressure on prices, he said.
Correct on all three fronts. Here’s the chart:
It’s very odd to see iron ore out of step with the Chinese business cycle but that’s what Goldman’s commodities bubble and bust has delivered.