China IS commodities and it’s going to break ’em ALL

When will China relent on its economic reform program around property developers? When will it stimulate? My answers are not yet and don’t hold your breath. Why? Let me show you two charts. The first nicely captures the extreme bullshit being peddled by Wall Street about a new commodities supercycle. Note that the trigger is


Evergrande losers take company executives hostage

Via Straits Times: Footage of Evergrande’s management being held hostage in company offices by anxious retail investors made the rounds on China’s social media earlier this week. “I have with me Nanchang’s top Evergrande representative surnamed Chen,” said WeChat user Yang Qiwen, referring to the city in Jiangxi province in south-eastern China. The posting included


Global energy crisis calms a little

Thermal coal and LNG futures both came off overnight. The former: The latter: Oil was still strong as we await the return of hurricane shuttered US production: Beijing continues its campaign to reduce power output. After steel cuts, which have curtailed a lot of EAF production, next is cement: Several Chinese regions have imposed restrictions


UBS: Sell Fortescue, RIO

And here they come. UBS on FMG: Downgrade to Sell: iron ore fundamentals deteriorating faster than expected We downgrade FMG to Sell (from Neutral), cutting our target to A$15/sh (from A$18/sh). Since peaking in July, the stock is down 34% while the iron ore price has more than halved. At spot (~$113/t) FMG still generates


Evergrande breaks Chinese property

Evergrande. Remember the name. Australian historians will. Yesterday it broke the Chinese property sector as its bonds were suspended: In order to ensure fair information disclosure and protect the interests of investors, after the company’s application, all existing corporate bonds of Evergrande Real Estate will be suspended for one trading day from the opening of the


The disastrous Fortescue chart

A quick note on a few FMG points as iron ore continues to fall. Dalian today: First, what a horrible chart FMG has with an immense double top: How far FMG corrects obviously depends upon the iron ore price. My best guess is we’re going back to $60 over the next six months, with a


Daily iron ore price update (Ding! Fasten your seat belts)

The ferrous complex was weak again on September 14, 2021 as spot fell, paper fell further overnight and steel is looking toppy worldwide: The PBoC tightened futures limits again and Evergrande is going bust. Enough said. Perhaps more importantly, the China property developer bust is transpiring just as the global post-COVID steel boom tops out.


Worldcom. Enron. Lehman. Evergrande.

Evergrande is going bust and nobody knows what that means. Here is its HK regulatory filing that reads like an obituary: Beijing has also retained bankruptcy specialists. The unhappy investors who were happy to take huge yields but not the risk that comes with it stormed Evergrande head office: “Evergrande return our money!” —


Next up: The coal crash

It’s been a wild few months for coal. We’ve gone from wallowing prices to record highs in the blink of an eye. But there are signs it’s coming to an end. Coking coal has been the craziest. As Chinese steel output has collapsed, coking coal has gone through the roof. This was always pretty stupid.


Goldman won’t mention the ore

Clearly, Goldman Sachs is still too long commodities: Growing scarcity across physical markets. Since last October, policymaker and investor focus has remained on the vaccine-driven demand recovery from the deepest recession on record. Yet today, physical goods demand has reached such high levels — above pre-pandemic trends in all but oil — that the system


Iron ore hits new low as Evergrande gets extend and pretend

The soft bailout of Evergrande has begun: Regulators in Beijing have signed off on a China Evergrande Group proposal to renegotiate payment deadlines with banks and other creditors, paving the way for a temporary reprieve as the cash-strapped developer struggles to come to grips with more than $300 billion of liabilities. China’s Financial Stability and


Daily iron ore price update (China dirt)

The ferrous complex was mixed on Friday 3rd of September 2021: In news, China wants more ore: China’s iron ore producers aim to increase domestic iron ore concentrate output by more than 100 million tonnes between 2021 and 2025, an official with the country’s steel industry association said on Saturday. Luo Tiejun, the vice-chairman of


CBA wrongly wrong on iron ore

The CBA has opted for the glass-half-full approach to steel and iron ore: “For iron ore prices to find meaningful support again, we would need to see policy on China’s steel output cuts relaxed,” he says. “That’s not as unlikely as it seems, especially if steel prices lift notably. We think that’s completely plausible given


Daily iron ore price update (more output cuts)

The ferrous complex was smashed on September 1, 2021 as spot cratered, paper held and steel tumbled: News was all about more output cuts: Production restrictions in various regions have continued to advance, and there are signs of increasing efforts. Due to the strengthening of dual control of energy consumption, the Guangxi region has imposed


Iron ore crash pushes commodity price index lower

The national accounts for the June quarter revealed that Australia’s terms-of-trade (ToT) hit its highest ever level, surpassing the September 2011 peak: That is likely to the be as high as the ToT gets, however, with the RBA’s commodity price index for August registering a 6.0% decline in SDR terms after hitting a record high