Commodities

The bad news starts with China’s official NBS manufacturing PMI: 49.2 in July (GS forecast: 49.9; Bloomberg consensus: 50.1), vs. 50.3 in June. Official non-manufacturing PMI: 49.0 in July (GS forecast: 49.6; Bloomberg consensus: 50.0), vs.

Sometimes you time it with precision.

If you read RIO’s palava, you wouldn’t think so. Q2 sales: 1.6 Mt (100%) shipped to China during the quarter (H1: 2.2 Mt). The first customer collections were completed in April following tertiary crushing in China, with Q2 sales totalling 0.4 Mt (100%) and achieved Fe at 65.8%.

Iron ore continues to struggle despite the Brent tailwind.

When the war in the Persian Gulf began back in February, it triggered a series of events that would be felt for decades to come, not only in the world of geopolitics but also in the balance of global energy consumption and manufacturing.

Iron ore had been trading in lockstep with oil through H1 as freight rates roared higher.

In the Persian Gulf, full-scale hostilities have once again resumed, as the ‘Memorandum of Understanding’ aimed at peace has proven completely nonviable.

Iron ore is following its seasonal pattern into a rebound (that will be aided by oil).

The ferrous complex is trying to hold $100.

As the uneasy truce between Washington and Tehran continues to mostly hold overall, Iran continues to attempt to throttle traffic through the Strait of Hormuz in order to maintain a greater degree of it’s negotiating leverage.

Steel prices are falling in the wake of the war on the prospect of resuming Gulf volumes.

Spewing, I missed this move lower thanks to the Iran War, but headwind seasonality is growing short, so I won’t chase it.

Shell chairman Andrew Mackenzie says the global energy crisis and instability in the Middle East could create a major opportunity for Australia’s LNG industry, as global buyers seek to diversify supply away from the Gulf region.

The ferrous complex is weak.

Since the flow of trade through the Strait of Hormuz was reduced to a trickle at the start of the U.S.-Iran war as February drew to a close, China and the United States have been effectively acting as Atlas, holding up the world of global energy supplies.

Iron ore has fallen 10% in recent weeks.

As we know, the Pilbara killer (Simandou) is pumping iron ore faster than anyone expected, to 2.2mt in May, suggesting that by year-end it could be in the 30-40mt annual range as locomotives arrive en masse.

According to ship tracking data from Kpler, shipments from the project’s Morebaya port reached 2.2 million tonnes during the month, far more than the record of 1.3 million tonnes set in April.

As the world continues to attempt to come to grips with the loss of somewhere around 13 million barrels per day in oil, fuel and condensate supplies that normally transit the Strait of Hormuz, there has been an unexpected guardian angel acting in the world’s favour and at its own expense: China.

The ferrous complex has come off but remains very elevated.

It’s been obvious that the ferrous market has been levitating for months.

The ferrous jaws are open.

The ferrous jaws are as wide as ever.

Are Supply Chains Breaking Again?

Iron ore is printing money, though I’m blowed if I know why.