The ferrous complex was soft on April 21, 2022: News is driven by the big three miners: BHP, the world’s largest listed miner, fell short of estimates for iron ore production for the March quarter, as a pandemic-related labour crunch weighed on its efforts to boost production in Australia’s Pilbara region. The miner also warned
The ferrous complex was roughly stable on April 20, 2022: The Chinese economy is in recession. Property markets are down by half. Beijing has declared steel output is going to be slashed for a second year: China’s state planner pledged to keep cutting crude steel output this year after reducing about 30 million tonnes of
The ferrous complex was mostly weak on April 19, 2022: The newsflow was poor: The iron ore price fell on Tuesday after a spokesperson for China’s state planner said the country would keep reducing steel output this year. Adding to concerns over demand prospects for the key steelmaking raw material, China’s steel production hub Tangshan
The ferrous complex rallied modestly over Easter, 2022: Yesterday’s China data dump revealed a few things. First, steel production has leaped: Pig iron output is running at about 2018/19 levels, down roughly 9% YoY or 30mt of iron ore through Q1: The rebound has restarted recycling at scale but it isn’t showing any signs of
The ferrous complex was down on April 13, 2022: The Chinese economy is in recession. Iron ore imports are down 15% YOY in March at levels first reached 6 years ago: Steel exports are also weak: Ferrous complex prices are being held aloft by a combination of Urkaine fears and inflation panic in markets. Underlying
The ferrous complex was weak on April 11, 2022: Some charts from Morgan Stanley for ya: A few points: China’s LNY steel restock was weak suggesting very poor sentiment. Mill ore inventories are OK and ports are piled high. Imports are very soft in volume terms. Cost curves are miles below. Without Ukraine, prices would
The ferrous complex was soft on Friday 8, April: Chinese demand for steel remains disastrous: But output is still rising: Perhaps a hint of displaced exports from the Ukraine war reaching China. On that front, the news is actually better than feared: Ukrainian miner Ferrexpo managed to find buyers for the majority of its
GMO’s Jeremy Grantham is back to his Malthusian best. I should remind you that he said almost exactly the same thing in 2010 before an enormous commodities bust. I disagree on decarbonisation being “spectacularly resource intensive”. In fact, the impact on consumption of extractive commodities is mild as recycling booms too. China is also about
The ferrous complex was firm on April 5, 2022 with Chinese markets reopening today: I am still nervous about the durability of this rally given the building headwinds to global growth and passing seasonal tailwinds but Morgan Stanley is more bullish. Marching on: Despite China’s Covid headwinds, iron ore is gradually moving higher – now
The ferrous complex continued on its merry way higher on April 4, 2022: Chinese markets were shut for the Qingming Festival but that couldn’t stop spot. I am no less uncertain about the underpinnings of this rally today. China looks to me to be entering a recession. All of Eurasia, in fact, and the US
The Russian-Ukraine war has launched the Reserve Bank of Australia’s (RBA) commodity price index to its highest level on record. As shown in the next chart, the commodity price index soared 8.4% in March in SDR (currency-weighted) terms to be up 20.1% over Q1 and by 40.9% year-on-year: The RBA’s commodity price index has historically
Below find Zoltan Pozsar’s latest note on his notion of Bretton Woods III underpinned by commodities. It’s a brilliant read but I still don’t entirely agree with it. I can’t see how a workaround for Russia to sell commodities to China (or India) has to result in a Eurorenminbi market that anybody else buys into.
The ferrous complex was bizarre on March 31, 2002: The unprecedented dislocation between spot and futures continues with the latter much higher than the former. I can only surmise that this is because futures are overbid by speculators while the underlying market is saturated with supply. Steel demand remains terrible. The China Steel PMI was
The ferrous complex was mixed on March 30, 2022: In the past week, Dalian futures have jumped 15% while spot has nowhere. I have never seen this kind of dislocation before. Perhaps the physical market is much looser than the heavy buying of futures would suggest. Perhaps it will converge all in one go soon.
The ferrous complex was soft on March 29, 2022: Chinese authorities have resumed their operations with Dalian hiking transaction fees again. However, for the time being, all that matters is the fog around Ukraine and OMICRON which may support prices until we get greater clarity. Against that, the Chinese PMIs will probably show more weakness.
Of all of the economic evils of the Morrison Government, this one is the worst. The new outlook for the AEMO for gas: In the short term, new greenfield infrastructure solutions are unlikely to be operating in time for the earliest identified risk of gas shortfalls, in winter 2023. Brownfield solutions, such as duplication of
The ferrous complex was firm on March 28, 2022: Here’s the explanation offered by the press: In Tangshan, China’s top steel producing city, iron ore producers are preparing to reduce or halt production altogether as the transport industry stalls because of a temporary Covid shutdown. The city, which represents 13 per cent of China’s overall
The ferrous complex was strong on March 25, 2022: Chinese demand is just awful but production is only terrible: There is still nothing fundamental to rationalise such high prices but we’ve got so many disruptions to both supply and demand in raw materials and finished steel that fog has settled over the market and bidding
Courtesy of ZeroHedge. — Sometimes repo guru Zoltan Pozsar is so far ahead of his time, it takes the “experts” weeks just to read up on all the required source docs to even grasp what he is talking about. Last week we reported that the Bloomberg news that one of the world’s largest independent energy merchants – the secretive
The ferrous complex was strong on March 23, 2022: CISA mid-March output was out and rebounded: One wonders if Chinese mills are starting to benefit from curtailed Ukrainian and Russian steel exports. Combined they were nearly 50mt. I’d expect China to pick up the lion’s share of whatever is knocked out. The export PMI will
The ferrous complex was weak on March 22, 2022: Herein is the truth of the underlying demand for steel inputs from World Steel: This is below 2020 output but roughly 5mt above 2019 though still falling away. In both years, iron ore was trading around $90. In 2021, crude steel output was roughly 100mt