No good news for iron ore today. Friday futures for October rebar and iron ore kept falling:
Though we did see a bounce in Dalian Friday night as it joined the global short squeeze. At the fundamental level, the outlook is still getting worse as the macro deteriorates.
The Chinese services economy is in full swing as mobility rampages:
But that is where the good news ends for bulk commodities. Car sales are OK but property sales have cratered all the way back to last year:
Developers remain cut off from dollar bond financing anyway so there is no transmission to starts:
There is some offset in the ongoing infrastructure front-loading:
But, as we know, that is set to slow in H2 with a 5% lower special bond quota than 2022 and more of that going into refinancing as well:
It is no wonder that steel supply and demand are both terrible:
June through August is usually a strong period for iron ore prices but this data is so bad that don’t know if we’ll see it.
Add that the US is sliding into recession, with Europe to follow, triggering a trade shock for China, and I’d just stay away from this market.
Unless or until Beijing panics.
