The ABS released trade data for the June quarter with Australia recording a record $28.1 billion trade surplus: The massive surplus was driven by iron ore exports, which soared to $152 billion in the 2020-21 financial year: However, the boom in exports over Q2 were driven entirely price increases, with export prices rising 13.2% over
The ferrous complex was weak on August 4, 2021 as spot fell, paper slumped overnight and steel rebounded strongly: This is all pretty good confirmation that the market agrees that it got it wrong that China is about to abandon its steel output cuts story. It’s not. CCP mouthpiece, The Global Times, clarified it in
The ferrous complex mixed onAugust 3, 2021 as spot firmed a touch, paper fell sharply overnight and steel was walloped again: The Dalian contract rolled forward which gives you some idea how steep is the backwardation. In news, it’s all about confusion, added to by the AFR: The Chinese government’s mixed messages on carbon emissions have sent
The ferrous complex dead cat bounced on August 2, 2021 as markets misinterpreted Chinese stimulus and ran with hope over fact. Spot and paper firmed. But steel was demolished: Reuters puts the cause on possible steel output cut reversals: Chinese ferrous futures fell on Monday, with steel rebar and hot rolled coils both plunging some
The ferrous complex was blasted lower on July 30, 2021 as spot was thrashed, paper was limit down, but steel firmed: The chart: The correction is happening for three reasons: Chinese regulatory clamps to slow steel output. Falling demand growth as Chinese property and infrastructure slow. Increasing global supply. There are have been three episodes
Evergrande appears to be going bust. It’s turning unruly and happening fast. Bloomie: China Evergrande Group’s crisis deepened after a court froze assets of its listed onshore subsidiary, spurring another selloff in its shares and bonds. The entire 20% stake in Shanghai-listed Langfang Development Co., held by the developer’s main onshore unit, was frozen from
The doom loop continues for Evergrande: Two more companies said China Evergrande Group failed to pay its bills on time, adding to signs of a cash crunch at the world’s most indebted developer. Huaibei Mining Holdings Co Ltd. filed a lawsuit against Evergrande in Anhui province, alleging a unit of the company missed payments, according
The ferrous complex was weak on July 29, 2021 as spot fell sharply and paper more. Steel has not updated: In my view, the correction has begun. These are unseasonal price falls and the headwinds are mounting fast. There are three reasons. The first is regulatory, via Bloomie: The export tariff on ferrochrome — used
The Australian Bureau of Statistics (ABS) has released its International Trade Price Indexes for the June quarter of 2021, which revealed that export prices soared by 13.2% over the quarter and by 26.0% through the year. By contrast, the import price index rose by 1.9% this quarter but fell 2.5% through the year. Surging iron
The ferrous complex remained stalled on July 28, 2021 with spot and paper stuck while steel is still strong: In news, it’s all about RIO’s record first half report which beat consensus slightly. But, it is still bearish owing to two factors, First, new supply: Mining has commenced at the $2.6 billion Gudai-Darri replacement iron
The ferrous complex stalled again on July 27, 2021 as spot fell, paper too and steel as well, finally: The culprit was yesterday’s news that China will likely impose new restrictions on steel exports, which adds to a long line of regulatory efforts to dampen iron ore prices. My view is that each is pretty
China has been progressively tightening the noose around iron ore for months now. With some success given recent falls in iron ore prices. Measures so far have included: Releasing strategic reserves. Punishing speculators and limiting futures bidding. Constraining steel output which will lower iron ore imports so long as the curbs are wide enough to
The ferrous complex was OK on July 26, 2021 as spot firmed and paper held. Steel has not updated: In other data, Chinese mills are restocking which is typical for this of year. Port inventories lifted to 129.5mt: This will aid prices while it lasts. But the reasons for concern are still there. Steel output
EY Australia has a new report out on the prospects for Aussie cola over the next three decades and the news is good: Two-thirds of jobs will be lost. Under an orderly scenario, fossil fuel demand falls 42% globally by 2040. Under the disorderly scenario, which delays action until after 2030, fossil fuel demand collapses
TSLombard with the note. Last September, Xi Jinping surprised the world by announcing two ambitious climate goals: that China would reach peak carbon emissions by 2030 and achieve carbon neutrality by 2060. Beyond the headline carbon objectives, the green initiative is an important domestic tool to bolster government efforts to centralize political power and allocate
China’s Three Red Lines policy for deleveraging property developers has pushed the largest and most highly geared to the edge of extinction. Everngrande is fighting on, pulling every string that it can: At least two of Hong Kong’s biggest lenders are reconsidering halts on mortgages for China Evergrande Group’s unfinished properties, after the decisions were
The ferrous complex stabilised on July 24, 2021 with spot up slightly and paper too. Steel has not updated: Since January, I have held a “sell the rallies” position for iron ore. I am now moving to an outright “sell” position. There are five reasons. First, there is early evidence that this time it is
The ferrous complex was half-hammered on Thursday 22, 2021 as iron ore gave way, paper kept falling overnight but steel jumped again: The same explanation is on offer from Reuters: Chinese iron ore futures fell for a fourth consecutive session, down more than 7% to their lowest levels in nearly three weeks, on prospects of
Check out this fantastical piece of speculation by Gordon Johnson of GLJ research: WHAT’S UP? While Evergrande’s bonds and equity trended up in the China Thursday trading session on news it resolved an issue with the bank that froze its accounts, this is PEANUTS in the grand scheme of things – while Evergrande has $107bn of B/S
Australian thermal coal has suddenly joined the ranks of crazed commodities. In the past two weeks it has literally gone vertical to prices unseen since pre-GFC: There are heats waves from Europe to China straining power grids triggering this price spike. It is also following the recent LNG price spike given the two energy sources
The ferrous complex was weak on July 21, 2021 as spot pukes, paper puked harder but steel is firm: This despite a turn high in Chinese port restocking to 127.3mt: So far this week, China’s attempts to breaks the nexus between capped steel output and higher iron ore prices may be working: Benchmark iron ore
Evergrande. Remember the name. The Chinese megadeveloper is rapidly morphing into some kind of Chinese ‘Lehman Brothers moment’. The Three Red Lines policy that is designed to deleverage large developers has triggered this latest round of crisis. Evergrande is preposterously leveraged with its equity worth less than 10% of enterprise value, owing to huge debts
Vale is out with its Q2 production report. According to Bloomie, it’s a disaster: The world’s second-largest iron producer churned out 75.7 million metric tons in the second quarter compared with the 78 million-ton average estimate among analysts tracked by Bloomberg. The result was still up from both the previous three months and the Covid-impacted year-ago period.
The ferrous complex was mixed on July 20, 2021 as spot fell, paper fell further overnight but steel lifted: This divergence between steel and iron ore is what China is attempting to engineer. Via Reuters: “Currently, the biggest variate to affect steel prices is crude steel output control policy … which is gradually being implemented
Another note from Goldman on the endless appeal of commodities: With the vaccine-shaped recovery well underway, markets have been pricing in expectations that US – and global – growth will peak this quarter. Alongside the surprise hawkish tilt in the Fed’s reaction function, this shift in growth outlook helped to partially unwind the reflation trade
The ferrous complex was soft Friday 16 July, 2021 as spot eased, paper too but steel was stronger (though note that the gains were over a few days): As warned last week, whenever the price approaches the $220 level, out comes the jackboot, from China over the weekend: “We will coordinate with relevant departments to
RIO’s Q2 productio report: Pilbara operations produced 152.3 million tonnes (Rio Tinto share 126.9 million tonnes) in the first half of 2021, 5% lower than the first half of 2020 due to above average rainfall, shutdowns to enable replacement mines to be tied in, processing plant availability and cultural heritage management. Ongoing COVID 19 restrictions
The ferrous complex was strong on July 15, 2021 as Chinese data was received well. Spot jumped, paper more but steel has not updated: The strength is being widely reported as resulting from weak Chinese data lifting hopes for stimulus. The opposite is true. The data was good and there is no more stimulus coming
The ferrous complex was soft on July 14, 2021 as spot was flat, paper fell but steel did not update: There are more bearish signals emerging at the front of the market. Grade spreads are widening: Which has led to big price falls in exporters with lower grades on offer. In India, which became the
UBS with the note: China steel mills restrictions could result in ~75Mt less iron ore demand in 2H… Press reports suggest China is imposing more restrictive measures on steel production in 2H21 to ensure output is lower y/y and to meet carbon emissions goal. MySteel reports Baowu is drafting its own plan to cut volumes
