Spot on note from Albert Edwards at Societe General: Surveys suggest that inflation fears have become investors’ number one concern. But why look at it that way? We could equally say it is investors’ own bullishness on the strength of this economic cycle that is driving prices sharply higher in the most cyclically exposed equity
The ferrous complex bifurcated yesterday as spot corrected lower after the day before’s price wackness. Paper shot up overnight with a broader dirt rally. Steel has not updated: A snippet from Capital Economics sums where we are at: The last few weeks of pump and dump have been a game of politicised speculation. The price
As usual, Australian discussion around the political economy is more gawking than it is intelligence. One could never accuse the Rich List of being anything but the former. But this year, especially, its timing is ludicrous. The top two richest, and three of the top ten, are at imminent risk of immense wealth loss: Gina
The great ferrous crash continued May 26, 2020 as Beijing maintained the rage against speculators in steel and iron ore alike. Spot iron ore is unchanged which, I suspect, is an administrative error. Paper was slaughtered again yesterday and steel is printing an epic crash: Here’s the chart: As steel mill profits are eviscerated, expect
The arrogance emanating from Australian commentary about its iron ore shipments to China in recent times has been something to watch. There is a collective failure of imagination in the inability to envision the end of the trade. Yet that is what will come, in large part. Today Sinocism has some good advice: Julian Evans-Pritchard
The ferrous complex was roughly stable on May 25, 2021. Spot firmed. Paper is stalled. Steel has not updated: CISA output for mid-May fell sharply from record highs: Year on year growth in output is now at its lowest since early Feb: Steel inventories are still abundant, up slightly year on year: As a quick
The ferrous complex was slaughtered yesterday as Beijing ramps up its campaign to burst the commodity bubble. Spot iron ore was slammed. Paper held on overnight. Steel was flushed: China’s NDRC was forthright: The meeting pointed out that since the beginning of this year, the prices of some bulk commodities have continued to rise sharply,
The panic about commodity prices has reached a new level of silliness at Bloomberg this morning: Despite Beijing’s best efforts, asset bubbles are forming in China. Home prices are soaring, prompting officials to revive the idea of a national property tax. A surge in raw material prices spurred pledges to increase domestic supply, toughen market oversight, and crack
The ferrous complex continued to deflate Friday as spot was clubbed, paper kept on falling, all of it catching down to steel: The bubble is bursting. Spot has further to catch up to paper. Steel is also still very high and will fall further through H2. Nothing has changed for me. We’ll probably deflate some
Readers will recall the Skyscraper Index, that colossal monument to human folly which so often predicts imminent recession for those that dare build to the heavens. In China, it is literally crumbling: The US consulate has warned Americans to steer clear of a shaking Shenzon skyscraper. There was no earthquake. Shenzen has 297 buildings above
The ferrous complex found a bottom yesterday as DXY fell and politics calmed down. Spot fell further. Paper stabilised. Steel has not updated: Not much in news but UBS has produced a note that looks at China’s options to trash Aussie iron ore: China is concerned about surging commodity prices but what can they do?
It is carnage in the ferrous complex. Yesterday the market was weak. Overnight it crashed limit down: The culprit is a new brand of sovereign risk to match and defeat Australian warmongering. Iron ore is now at the top of the CCP agenda: Premier Li Keqiang of the State Council presided over an executive meeting
Societe Generale with the note: The economic recovery in China continued in April but remained uneven. Growth in the industrial sector softened albeit at a still healthy pace, while services failed to strengthen further despite the containment of COVID-19. On the demand side, manufacturing and property investment quickened, but infrastructure investment slowed, probably due to
The ferrous complex was hot again yesterday but was cooled overnight by a full-court press coming from China to pop the bubble: China is not happy and the NDRC has shown its hand: “The rise in commodity prices has both pros and cons on China. On the one hand, it is conducive to improving the
Another terrific note from Nordea: Finally, there was a pick-up in volatiliy. At least in the equity market. Bond and currency markets didn’t react much at all to the surprise surge in the US CPI “inflation” index. By the close of the week, the latter two markets (2y/5y/10y yields and the DXY index) had retraced
The ferrous complex is still in an advanced state of hysteria as spot and paper roar while steel continues to crash: As said in recent weeks, I have no idea where the price is going now in the near term. It is unhinged by fear and greed. What I can say is that the leading
Capital Economics with the note that maps out the coming iron ore crash: Both bank lending and broad credit dropped off more sharply than most expected in April. Apart from during last year’s lockdown, loan growth hasn’t been this slow in nearly two decades. The net increases of both bank loans and aggregate financing (AFRE),
The ferrous complex pumped and dumped last week in a manner consistent with a blowoff top: Spot boomed then busted. Paper too. And steel: Steel output remains huge driven by catch-up growth: We may well see seasonal patterns impose themselves from here with price downside ahead through June. This is the construction weak season with
The ferrous complex crashed yesterday after an insane week of gains: The spot market was closed owing to a Singapore holiday but paper tells the tale. Rebar was belted as well. Is the peak in? I have no idea. This is now purely a sentiment-driven market. China waved its hands frantically yesterday: China will monitor
Yesterday Australia received some very, very big news. It wasn’t reported because it’s pretty scary. Goldman summed it up nicely: NBS released the key results of the 7th population census today. Overall population in China reached 1.412 billion in 2020, an average growth rate of 0.53% yoy from 2010 to 2020; in comparison with the
Commodity prices are a bubble and the pin is closing in fast. China released credit data for April overnight the slowdown is outpacing even my expectations. China has yanked a credit handbrake. Total social financing came in at 1.85tr yuan within which bank credit made up 1.47tr This is down 38.5% year on year, the
The ferrous complex calmed down a little yesterday after Chinese regulatory intervention but oftentimes it takes more than one hammer to hit the iron ore nail so expect further moves. Spot eased. Paper firmed overnight. Steel waltzed straight through: In data new, Brazilian April exports were soft as expected, up only 7.5% over the year.
As we know, iron ore is off the wall for the time being. I am expecting a big surge in supply in coming months. Here are some UBS charts illustrating the point. Recent weeks have been soft: Driven by Australia, mostly RIO: For a net result of OK at best: As you can see, the
The ferrous complex has shot clear of Planet Earth with spot losing its anchor. Paper was limit up plus all day yesterday but got hammered 5% last night as Chinese regulators dropped the jackboot on Dalian margin requirements. Steel is mad (note the table has several days of gains): Gone is any concern for the
Australia’s China divorce hits another milestone today. Following recent Morrison Government warmongering and ripping up VIC’s BRI deal, the blowback has arrived as the next commodity to be targeted is LNG: Two Chinese importers have been told to avoid Aussie LNG. China imported 29mt in 2020. About 10mt of that is above contract obligations. Recall
The entire ferrous complex is now in an advanced state of hysteria, both greed and fear. Everything is tearing the roof off (though steel did not update): The underlying market is not tight enough to rationalise this. Steel output is very strong but entering several weak demand months in China. Iron ore supply is fine
Iron ore is off and running with spot above $200, paper still going higher overnight and steel out of control: How high we get now is anybody’s guess. Post-Q1 seasonal supply is yet to rebound: It should roar higher than 2020 in short order. Just as Chinese seasonal weakness hits in May/June owing to southern
JPM was last onto this boat but it’s making up for lost time with a new note: Inflation hedging was a big theme in 2010. At the time, the Fed’s Quantitative Easing increased its balance sheet above $2T. Many investors thought it will inevitably lead to inflation. There was a rush to buy commodities, gold
Iron ore spot prices jumped again overnight, up $3.05 to $192.70. Platts has more bullishness today: Iron ore prices have risen to record highs in recent weeks, largely because supply has not been able to keep pace with demand in China, where crude steel production has grown by 30% over the past five years. Unless
Most markets are closed in China but iron ore spot is trading, up $3.20 to $189.65. In news, it’s all about scrap, via Platts: Ferrous scrap has decoupled from stronger iron ore prices so far in 2021, as low coking coal costs and strong steel demand in China and elsewhere support iron ore consumption at
