Daily iron ore price update (losing proposition)

The ferrous complex was weak again on October 20, 2022:

Dalina futures rallied overnight before Wall St fell so that may reverse this morning.

Two points today. Bloomie has a snippet on Chinese steel margins:

Iron ore prices seem to be consolidating below $100 a metric ton as economic stimulus fails to reignite construction work in China. There may be further room to fall, judging by the modeled margins of its steelmakers. Steel prices fell by nearly a third in the 12 months through October, a decline matched by the movement in coke — but iron is only 11% cheaper than it was last year, helping drive mills into losses on every ton of coil and rebar they produce. With the floor space of China’s buildings under construction in August running 4.5% below the previous year’s levels, that’s a troubling sign for the direction of ore demand.

These are the conditions under which mills will aggressively destock and crash prices. Beware!

Second, Goldman’s outlook for Chinese property sales next year is worth a mention. It expects another 10% downside for sales which will look like this:

A correction similar in scale to the entire 2013-15 correction still lies ahead…