The ferrous complex is warming into n historic crash now:
Futures managed an overnight rebound but make no mistake this is not over by a long distance.
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The key chart is the ongoing collapse in property floor area starts with the projection from current sales:
The ongoing attempt to offset this with infrastructure is failing in volume terms. Cement tells the tale:
After hugely overproducing steel through H1, mills were finally forced to cut output hard in June:
It is probable that the course of steel output this year will follow the pattern of H2, 2021. According to the most recent data from MySteel it already is:
The only silver lining is that, just as last year, steel producers are shuttering a lot of EAF output which is protecting BOF:
But that’s not going to last, either, as rebar output for construction craters amid huge inventories:
Miners are also trying to play catch-up on volume targets in H2 so even the supply oligopoly won’t be able to support prices.
And all of this before we get to any US recession and inventory unwind into a China trade shock.
The base case for iron ore is to fall to at least the marginal cost of production of around $60 before year-end.
The risk case is a rerun of 2015 with no end.