It is all well and good to keep a positive outlook on things but sometimes you just have to look out your window to know what’s really going on: Jiangsu — a Chinese province with an economy as large as Canada’s — is curbing electricity supplies to industry as Beijing pressures it to reduce energy
China Evergrande’s main unit Hengda Real Estate has clarified that it will make coupon payments for onshore bonds due tomorrow. It looks like it’s probably a default: In a vaguely worded exchange filing on Wednesday, the unit said that the issue for its 5.8% 2025 bond “has been resolved via negotiations off the clearing house,”
Iron ore was unchanged yesterday at $94. It just keeps getting worse for the ferrous complex. China now has a steel glut. Levels are higher than this time last year which is very high: But steel output is well below 2020: So the inventory to sales ratio is climbing fast despite all of the output
The ferrous complex is fucked. No other word for it. Despite Dalian being closed, the spot ore price was smashed again with Singapore futures: We appear to be on a one-way ticket to $60 and an overshoot has to become a serious possibility as well. I also think that ludicrous coking coal prices are next.
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
The ferrous complex remained under intense pressure on September 17, 2021 with both spot and paper getting flogged again: There was no movement in Dalain overnight because it is closed for holidays until Wednesday. A circuit breaker if ever there was one needed. My $100 target reached! Where to next? UBS has more: Iron ore
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
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
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. 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 ferrous complex was in free fall on September 16, 2021 as spot and paper collapsed. Steel has not updated: Yes, we will likely be at $100 tomorrow. I was not bearish enough. There is no end is sight. CISA early September steel output data kept on falling: And the Chinese property developer shakeout is
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
The globe is being gripped by a mounting energy crisis. It is being sold by Wall Street as the fruits of decarbonisation and ESG policies, to pump up a bubble. But it appears more a combination of temporary factors for both demand and supply that will take time to resolve but is not structural. The
The ferrous complex was very weak again yesterday as China’s construction hard landing became obvious. Spot tumbled and paper fell more overnight. Steel has not updated: Worse is still ahead. $100 this year and $60 next with all the risk being to downside for earlier. Some folks don’t get it. Jevons Global at Livewire: Trite
A few weeks ago in Liyang Star City, Kunming City, China, we saw this: The blasting involved 15 high-rise residential buildings in the second phase of Liyang Star City, Kunming City, China. The project was unfinished due to a break in the developer’s capital chain. At the end of last year, the local government restarted
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.
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!” pic.twitter.com/F6zbJu21jF —
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.
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
The ferrous complex was mixed again on September 13, 2021 as spot fell sharply, paper held on and steel bounced hard: There were more rumours of production cuts in steel mills for the rest of this year. I expect these cuts to be permanent. Or, at least until the panic sets in over growth. Below
The ferrous complex was mixed on September 10, 2021 as spot fell, paper was flat but steel lifted: Chinese iron ore inventories are rising again, hitting 131mt last week: That China has rising iron ore inventories amid crashing prices tells us all we need to know about the slackness in the market. The cartel knows
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
The ferrous complex crashed again on September 6, 2021 as spot fell off a cliff, paper has some catching up to do and steel did not update: CISA steel output data for late August was smashed to a new low: Though at least inventories fell 10% so demand was better. However, iron ore supply is
Morgan Stanley with the note: 2021 has been a harder year for many investors than the headline indices imply. It’s been a year where ‘ESG’ and ‘Quant’ remain key structural trends in the investment community. And it’s been a year that has seen an almost constant, running debate over the outlook for growth and inflation. Commodities,
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
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
The ferrous complex was weak again on September 2, 2021 as spot fell more and paper held on: There is now an iron ore glut. It is everywhere you look. FMG grade discounts are blowing out: As iron ore prices have fallen from record highs, Fortescue Metals Group (ASX:FMG) has seen the return of significant
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
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
If there are two words in the English language that I enjoy writing they are “limit” and “down”. That’s iron ore today: And the Caixin PMI: China hard landing here we come.
